Since Apr-June (Q1) 2010-11, Public Debt Management Cell (PDMC) (earlier Middle Office), 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 July - September 2021 (Q2 FY22).

During Q2 of FY22, the Central Government issued dated securities worth ₹ 3,83,863 crore as against ₹ 3,18,493 crore in Q1 of FY21, while repayments were at ₹ 34,070 crore. The weighted average yield of primary issuances increased to 6.26 per cent in Q2 FY22 from 6.11 per cent in Q1 of FY22. The weighted average maturity of new issuances of dated securities was lower at 16.51 years in Q2 of FY22 as compared to 16.92 years in Q1 of FY22. During July - September 2021, the Central Government did not raise any amount through the Cash Management Bills. The Reserve Bank conducted six Open Market Purchase under G SAP 1.0 involving purchase of ₹ 1,20,001 crore and sale of ₹ 30,000 crore 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 ₹ 6,99,471 crore during the quarter.

Total liabilities (including under the ‘Public Account’) of the Government, as per provisional data, is ₹ 1,25,71,747 crore at end-September 2021 as against ₹ 1,20,91,193 crore at end-June 2021. This indicates a quarter-on-quarter increase of 3.97 per cent in Q2 FY22. Public debt accounted for 91.48 per cent of total outstanding liabilities at end-September 2021 as against 91.60 at end-June 2021. Nearly 30.56 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 37.82 per cent and that of insurance companies at 24.18 per cent at end-September 2021.

The yields on Government securities hardened in the secondary market due to increase in supply of G-secs during the quarter like in first quarter of FY22. In secondary market, trading activities were concentrated in 3-7 year maturity bucket during the quarter mainly because of less trading observed in 10 year benchmark security due to low float. However, the yields were supported by decision of MPC to keep the Policy repo rate unchanged at 4 percent, to continue with accommodative stance and to conduct Open Market Purchase under G SAP 2.0 during the Q2 FY22.

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Public debt management: increased government securities issuance and yield hardening amid RBI open market operations and accommodative policy. Public debt management in July-September 2021 recorded increased dated securities issuance with higher weighted average yield and slightly lower weighted average maturity; repayments occurred and no Cash Management Bills were raised. Total liabilities rose quarter on quarter with public debt as the dominant component and a significant share of dated securities having residual maturity under five years. Market yields hardened amid increased supply, trading concentrated in the 3-7 year segment, and Reserve Bank open market purchases and liquidity absorption under LAF accompanied an accommodative policy stance.