Status paper on the Government Debt released

Since 2010 the Central Government has been bringing out an annual Status Paper on public debt. Annual Status Paper on government debt provides a detailed analysis of the overall debt situation of the country, including state government debt and enhances transparency by providing a detailed account of debt operations and providing an assessment of the health of the public debt portfolio. Main Features of the government debt are as follows: • Central Government Debt at 47.1% of GDP at end-March 2015 has stabilised as ratio to GDP, after witnessing a consistent decline from 61.4% in 2001-02. • General Government debt (GGD)-GDP ratio worked out to 66.1% at end-March 2014, significantly lower than historical high at 83.3% in 2003-04 owing to fiscal consolidation process at Centre and State level. • 93.8% of total Central government debt at end-March 2015 is denominated in India's currency. As percentage of GDP, external debt constituted a low 2.9% at end-March 2015, implying low currency risk to the government debt portfolio and impact on balance of payments remains insignificant. T • Share of marketable securities in total internal liabilities increased from 43% in 2000-01 to 78.5% at end-March 2015. The Government is also moving toward alignment of administered interest rates with the market rates, such as interest rates on small savings. • Most of the public debt in India is at fixed interest rates, with only around 1% floating rate debt at end-March 2015, insulating debt portfolio from interest rate volatility and providing stability to budget in terms of interest payment. • The Government is continuing its efforts to elongate the maturity profile of its debt portfolio for lower rollover risk. Weighted average residual maturity of outstanding government securities at end-March 2015 was 10.23 years which is high compared to international standards. The tenor of dated securities goes up to 30 years as at end-March 2015, which is extended further to 40 years now after successful issuance of 40 year bond in October 2015. At end-March 2015, about 28.2% of outstanding stock had a residual maturity of up to 5 years, indicating a relatively lower roll-over risk in medium-term, which is further supported by the government active debt management in terms of switches and buy backs. • The largely domestic and institutional investor profile contributes to stable demand for government securities. Ownership pattern of dated securities indicates a gradual broadening of market over time. The share of commercial banks dropped from 61% in end-March 2001 to 43.3% in end-March 2015. With announcement of Medium Term Framework for a more predictable regime for investment by the foreign portfolio investors, the FPI share is expected to increase further to 5 % by end- March 2018. • Debt Sustainable- IP/ RR ratio (interest payments to revenue receipts) of Centre has decreased to 36.5 % in 2014-15 from about 52 % in the beginning of 2000s. Centre's Average Interest Cost (AIC) has declined to 6.7 % in 2014-15 from 8.1 % in 2000-01. The AIC is stable and well below nominal GDP growth rate, which indicates that India is comfortably placed in terms of sustainability parameters of public debt. A summary of statistics present in the paper is tabulated as under: Summary of key statistics Source: PHD Research Bureau complied from Ministry of Finance, GOI