Since April-June (Q1) 2010-11, Public Debt Management Cell (PDMC), Budget Division, Department of Economic Affairs, Ministry of Finance, has been bringing out a quarterly report on debt management on a regular basis. The current report pertains to the quarter January - March 2021 (Q4 FY21).

During Q4 of FY21, the Central Government issued dated securities worth ₹ 3,20,349 crore as against ₹ 76,000 crore in Q4 of FY20, while repayment were at ₹ 29,145 crore. The weighted average yield of primary issuances increased to 5.80 per cent in Q4 FY21 from 5.68 per cent in Q3 of FY21. The weighted average maturity of new issuances of dated securities was lower at 13.36 years in Q4 of FY21 as compared to 14.96 years in Q3 of FY21. During January - March 2021, the Central Government did not raise any amount through the Cash Management Bills. The Reserve Bank conducted nine special and normal OMOs involving simultaneous purchase and sale of government securities during the quarter. The net daily average liquidity absorption by RBI under Liquidity Adjustment Facility (LAF) including Marginal Standing Facility and Special Liquidity Facility was at ₹ 3,35,651 crore during the quarter.

Total liabilities (including liabilities under the ‘Public Account’) of the Government, as per provisional data, increased to ₹ 1,16,21,781 crore at end-March 2021 from ₹ 1,09,26,322 crore at  end-December 2020. This represented a quarter-on-quarter increase of 6.36 per cent in Q4 FY21. Public debt accounted for 88.10 per cent of total outstanding liabilities at end-March 2021. Nearly 29.33 per cent of the outstanding dated securities had a residual maturity of less than 5 years. The ownership pattern indicates the share of commercial banks at 37.8 per cent and at 25.3 per cent for insurance companies at end- March 2021.

The yields on Government securities hardened in the secondary market due to increase in supply of G-secs during the quarter. Further, hardening of yields was more on the short end of curve due to increase in weekly borrowing and also announcement of resumption of normal liquidity operations by the Reserve Bank. However, the yields were supported by decision of MPC meetings held on 5^th February, 2021, wherein MPC kept the Policy repo rate unchanged at 4 percent and reiterated to continue with accommodative stance, at least during the current financial year and into the next financial year – to revive growth on a durable basis and mitigate the impact of COVID-19 pandemic on the economy, while ensuring that inflation remains within the target going forward.

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Public debt management: increased dated securities issuance and yield hardening amid liquidity operations and ownership concentration. The Government issued substantially more dated securities in Q4 FY21, with a higher weighted average yield and shorter weighted average maturity than the prior quarter; no Cash Management Bills were issued. The Reserve Bank conducted multiple OMOs and maintained net liquidity absorption under LAF. Provisional end March 2021 liabilities rose quarter on quarter, public debt formed the bulk of liabilities, and a notable share of dated securities had residual maturity under five years. Yields hardened-particularly at the short end-due to increased supply and resumed normal liquidity operations, partially offset by the MPC's unchanged policy rate and accommodative stance.