India Macro Data - vrk100 - 21Sep2021

India Macro Data  

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The following are some of the important data points relating to Indian economy. 

1) G-Sec Outstanding: Rupee outstanding loans of Government of India (GOI) as on 20Sep2021 are Rs 77.02 lakh crores (excluding special securities). This figure is also known as G-Sec (Government Securities) outstanding. The data source is Reserve Bank of India. 

 

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Read more:

Bond Basics: All You Want to Know About Bonds  

Stocks, Bonds, Rupee and Inflation - How Are They Inter-connected?  

Government Securities Market in India & Duration Management  

Indian Economy's Strengths and Weaknesses  

Rising Government Debt and Fiscal Deficit  

Cash Management Bills and Government Borrowing  

Basics of Inflation-Indexed Bonds 

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The data from 1999 to 2021: As can be gleaned from table 1 below, the outstanding G-Sec amount has increased by 120 per cent during the Modi Government regime (from Rs 35.14 lakh crore in March 2014 to Rs 71.68 lakh crore in March 2021). During the Manmohan Singh Government (2004 to 2014), the outstanding G-Sec surged by 280 per cent.

The G-Sec amount does not include other public debt and external debt. 

Table 1:

2) Ownership pattern of Govt of India Date Securities: The biggest holders of G-Secs are commercial banks. They hold 37.8 per cent of total outstanding, which is Rs 71.68 lakh crore as on 31Mar2021. The second and third biggest holders are insurance companies (25.3 per cent) and Reserve Bank of India (16.2 per cent). The next in line are provident funds (4.44 per cent), mutual funds (2.94 per cent) and FPIs (foreign portfolio investors 1.87 per cent).

Table 2:

3) Ownership Pattern Over the Years: As per the latest data, as at the end of June 2021, available from Reserve Bank of India (RBI) and Govt of India, the biggest holders of Govt of India Dated Securities are commercial banks (36.0 per cent), insurance companies (25.8 per cent) and Reserve Bank of India (17.1 per cent). The outstanding amount is Rs 78,82,533 crore (end-Jun2021).

In the past five years, the share of commercial banks has decreased to 36 per cent (Jun2021) from 39.9 per cent (Jun2016); the share of insurance firms rose to 25.8 per cent from 22.6 per cent; and the share of RBI rose to 17.1 per cent from 14.9 per cent five years ago.

In the past three years, the RBI has been buying government securities (G-Secs) aggressively which is reflected in its increased ownership pattern. It may be noted this period is coincided with the current RBI governor Shaktikanta Das.

Table 3:

4) Yield and Maturity of Govt of India Dated Securities: Despite persistently high inflation above six per cent for most of the past 20 months, RBI has been able to borrow government securities from the market at or below six per cent yield (see table 4 below). RBI in the past two years, has been resorting to heavy buying of government securities through its Open Market Operations (OMO), which has kept the India 10-year G-Sec yield well below six per cent. 

It may be noted RBI is the money manager for Gov't of India in the sense that RBI borrows money from the market on behalf of Gov't of India.

Table 4:

Weblinks:

RBI public debt statistics

RBI Time Series on public debt

Govt of India public debt management  - quarterly reports

RBI 15Sep2021 Handbook of Statistics on Indian Economy - RBI DBIE (click on 'Handbook of Statistics on Indian Economy' section)page

 

 

 

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Disclosure:  I've vested interested in Indian stocks and other investments. It's safe to assume I've interest in the financial products discussed, if any.

Disclaimer: The analysis and opinion provided here are only for information purposes and should not be construed as investment advice. Investors should consult their own financial advisers before making any investments. The author is a CFA Charterholder with a vested interest in financial markets. 

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Jittery Bond Markets-Is It Time to Invest?-VRK100-14Aug.2013

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Rama Krishna Vadlamudi, HYDERABAD       14 August 2013
www.ramakrishnavadlamudi.blogspot.com

Dear Friend,

After WPI (wholesale price index) inflation unexpectedly rose to 5.79% in Jul.2013 from 4.86% in Jun.2013, the bond markets fell sharply and the 10-year G-sec yield has closed at 8.50% on 14Aug2013. This indicates more than 100 basis points rise in 10-year G-sec yield in the last one month or so. The rise reflects:

1. Reserve Bank of India's liquidity tightening measures, undertaken after July 15th, purported to stem Indian rupee's fall against US dollar.

2. The inability of the Central/State Governments and RBI to control inflationary expectations and trends in the Indian economy. While manufacturing inflation is contained by vitiating investment climate in the country, the authorities (RBI as well as the Governments) have been unable to do anything meaningful in controlling food and fuel inflation. The self-made fiasco has been going on for the past four to five years under the Manmohan Singh leadership. 

3. The realisation by the market participants that the authorities are not in a position to control either fiscal deficit (before 2014 General Elections) or current account deficit. 

4. Complete failure of the management of external value of rupee, especially in the last six to nine months, on the part of RBI and the Central Government #. 

(# Even as I was posting this article on my blog, news has broken out that the RBI has taken certain steps to control overseas direct investments and outward forex flows. My initial reaction to these measures is that these are regressive steps taken under panicky conditions.)

As you're aware, markets are integrated—meaning that what is happening to rupee is impacting bond as well as stock markets; and what is happening in bond markets is affecting both the rupee as well as the stock markets. To sum up, the stock, bond and currency markets are closely interlinked. The inter-dependence does not end in domestic markets. All the financial markets have been dancing to the tune of global developments, almost on a daily basis, particularly in the last one decade. You've seen how violently the Indian bond markets reacted after the US Fed in May/June 2013 hinted at tapering its quantitative easing or QE3 bond buying programme.

My point is that we need to have an understanding of all these markets—both domestic as well as global—to be able to exploit any mispricing of securities.

I think Indian bond markets are poised to offer good investment opportunity for investors with a time horizon of two to three years. I think we're inching closer to getting better opportunities. Ordinary investors like us cannot time the markets. However, we can start investing in some good debt mutual funds, which have exposure to long term bonds. When interest rates start to fall, prices of long term bonds will rise much faster compared to short term bonds. Hence, you can consider exposure to some long term bond funds to exploit the opportunities thrown up in the market, depending on your risk appetite. 

If my memory is correct, the previous high of 10-year G-sec yield was around 9.55% in 2008. Investors who bought bonds at a yield level of 9.50% or 9.00% had reaped phenomenal returns in the next three months. 

If the 10-year yield rises to 9.25% or 9.50% in the next few weeks/months, it'll be an excellent opportunity for bond investors. But I doubt whether RBI will allow the 10-year G-Sec yield to rise to 9.50% or above. (RBI is the banker to the Central Government. RBI always takes care of the Government's interests. If bond yields rise, the interest cost for the Government goes up. So, RBI always tries to keep the yields lower in order to protect the government.) So, the safe option is to invest in long term bond mutual funds, when the 10-year G-sec yield reaches a range of 8.75% and 9.25%. 

If there is too much panic in bond markets, because of inflationary concerns or something to do with the rupee, then bond market may react feverishly creating excellent opportunity for bond investors with a time horizon of two to three years. Disclaimer: Please check with your competent financial adviser before making investments. This post is meant for information purposes only. You can select some gilt mutual funds by doing thorough research or after consulting your adviser. 

Sharing is Winning,

RamaKrishna Vadlamudi

P.S: Post your comments on:

http://ramakrishnavadlamudi.blogspot.in/