According to the the quarterly public debt management report released by the Finance Ministry on 28 November 2011, the Indian government's internal debt rose during the second quarter (July-September) of 2011-12. The government had to pay higher interest to raise funds. The internal debt to GDP ratio increased to 32.3% of GDP during second quarter of 2011-12 from 31.4% in the April-June quarter.
The flatter yield curve, indicating small difference between short term and long term rates, made more sense to raise longer tenure funds. The average maturity of outstanding government securities increased to 9.68 years during the Junuary-September quarter in 2011 from 9.58 years during the October-December quarter of 2010. The bonds maturing in one year also reduced to 4.25% during the second quarter of 2011-12 fiscal from 5.33% in the previous quarter.
As per the report, flat yield curve and market appetite, issuance under shorter maturities was reduced during the quarter taking into consideration rollover risk.
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