FY2013 Gross and Net Market Borrowings higher by 9.4% and 7.1% respectively

(Snapshot of the report on Public Debt Management for January-March 2013)

 

The gross and net market borrowing requirements of the Government were reduced in the revised estimated for FY2013 to Rs. 5,58,000 crore and Rs.4,67,384 crore from budgeted levels of Rs.5,69,616 crore and Rs. 4,79,000 crore, respectively. However, during FY2013, gross and net market borrowings of the government were higher than previous year by 9.4%per cent and 7.1%, respectively.

 

Government Finances-- The gross fiscal deficit of the Central Government in revised estimates (RE) was placed at Rs. 5,20,925 crore (5.2% of GDP) in 2012-13 as against budgeted level of Rs. 5,13,590 crore (5.1% of GDP). The gross and net market borrowing requirements of the Government were, however, reduced in revised estimates for FY2013 to Rs. 5,58,000 crore and Rs.4,67,384 crore from budgeted levels of Rs.5,69,616 crore and Rs.4,79,000 crore, respectively. Gross fiscal deficit for FY2014 is budgeted at Rs. 5,42,499 crore (4.8% of GDP) with corresponding increase in gross and net market borrowings to Rs. 5,79,009 crore and Rs. 4,84,000 crore respectively.

 

The fiscal outcome during April-February of FY13 indicates some deterioration in terms of key deficit indicators as % of revised estimates (RE), vis-a-vis their position during the same period of the previous fiscal year, mainly due to increased expenditure. Gross tax collections during the same period at 78.3% of revised estimates were marginally higher than 78% a year ago. In the direct taxes, while collections from corporation tax at Rs. 2,57,984 crore showed a growth rate of 7.7% as against 11.2% growth projected in revised estimates, personal income tax collections at Rs.1,53,134 crore showed a robust growth rate of 22.3% against 21% growth rate in revised estimates for FY2013.

 

Among the major indirect taxes, while collections from customs duties showed growth of 9.3% during April-February 2012-13 marginally lower than revised estimate growth of 10.4%, growth in excise duties at 19.6% exceeded the revised estimate growth of 18.1%. Service tax collections increased by 34.9% during the period under discussion showing a deceleration from 36.1% growth projected in the revised estimates. Total expenditure during April-February 2012-13 at 85.2% of revised estimate was higher than 83.9% during the same period of previous year.

 

As a result of higher expenditure, revenue deficit and fiscal deficit during April-February 2012-13 stands at 101.2% and 97.4% of revised estimates higher than 96.6% and 94.6%, respectively, during the same period a year ago. Primary deficit at 119.2% of revised estimates was also higher than 104.5% during the corresponding period of the previous fiscal year.

 

Fiscal outcome April-February 2013                                                   (in Rs. Crore)

 

Outstanding Public Debt-- The total public debt (excluding liabilities under the ‘Public Account’) of the Government increased to Rs. 40,83,040 crore at end-March 2013 from Rs. 40,64,755 crore at end-December 2012. This represented a quarter-on-quarter (QoQ) increase of 0.4% compared with an increase of 4% in the previous quarter (Q3 of FY13). Internal debt constituted 91.1% of public debt, compared with 90.7% at the end of the previous quarter. Marketable securities (consisting of Rupee denominated dated securities and treasury bills) accounted for 82.3% of total public debt, compared with 81.9% at end-December 2012. The outstanding internal debt of the Government at Rs. 37,18,633 crore constituted 37.1% of GDP compared with 36.8% at end-December 2012.

 

Composition of Public debt

Source: Ministry of Finance

 

In the secondary market, bond yields eased during the quarter due to policy easing by a total of 50 bps as well as OMO purchases by RBI, decline in inflation rate, slowdown in GDP growth rate and reduced supply of securities. Trading volumes increased significantly during the quarter driven by falling yields. Outright transactions during FY13 increased by 89.0 per cent over FY12.The annualised outright turnover ratio for Central Government dated securities for Q4 of FY13 went-up to 6 from 3.2 during the previous quarter.

 

Warm regards,

 

Dr. S P Sharma

Chief Economist