Source: Indian Government Data
The national debt of India is the money owed by India’s federal government, which is based in New Delhi. The debts of India’s states and local government are not counted as part of the country’s national debt.
According to the IMF, India’s debt to GDP ratio is around 68%. This is a comfortable figure because it is well below 100% and leaves the country room to borrow more in the event of of a financial crisis.
The ultimate guarantor of India’s national debt is the central Indian government, with the name “Government of India” printed on each bond as the issuer. In many countries, the government’s finance department/Treasury is responsible for issuing bonds and managing debt. However, in India, things are a little different. The Indian national debt is managed by the country’s central bank.
The Reserve Bank of India is entirely owned by the Indian central government and it is tasked with managing the national debt and also the money supply. The RBI is responsible for regulating financial services in India and it is the country’s lender of last resort.
The RBI operates a series of regional banks, much in the way that the Federal Reserve is organized in the United States. However, only the Reserve Bank of India’s headquarters in Mumbai issues government securities. The national debt is managed by a bank division, called the Public Debt Office (PDO).
The Reserve Bank of India raises debt for the Government of India through a range of instruments, which the RBI calls “G-Secs.” This term is short for “government securities” and has become common parlance in the Indian financial services community. The instruments that the PDO issues fall into the following categories:
The Reserve Bank of India also issues other debt instruments on behalf of nationalized companies and state and local government.
Government securities are issued on specific dates of the calendar and in specific sales formats according to the type of security. The table below summarizes these conditions.
Security type Sales method Day
Bonds Auction Twice a year, always on a Friday
91-day T-bills Auction Every Wednesday
184-day T-bills Auction Every Wednesday before the reporting Friday (every other Wednesday)
364-day T-bills Auction Every Wednesday after the reporting Friday (alternates with 184-day T-bill sales Wednesdays)
Cash Management Bills Auction Ad-hoc
All sales of government securities are conducted through the online trading platform, E-Kuber, which is owned by the RBI and used for the initial offerings of public sector securities. Another section of the E-Kuber system manages the secondary market for bonds. This is called NDS-OM.
You have to register in order to use E-Kuber. Those people and institutions that have access to the system are called “primary members” (PMs). Institutions that have the right to buy bonds on behalf of customers are called “primary dealers (PDs).
The major holders of Indian bonds, and therefore, the owners of India’s national debt ranked by the magnitude of their holdings is:
The amount holdings of each of these groups is shown in the table below.
Institution Type Percent Amount (Rs bn)
Commercial Banks 42.68 23,033.45
Non-Bank PDs 0.29 156.51
Insurance Companies 23.49 12,677.03
Mutual Funds 1 539.68
Co-operative Banks 2.57 1,386.97
Institutions 0.9 485.71
Corporates 0.91 491.11
Foreign Portfolio Investors 4.35 2,347.6
Provident Funds 5.88 3,173.31
RBI 11.62 6,271.06
Others 4.4 2,374.58
State Governments 1.91 1,030.78
Total 100 53,967.78
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