Centre's debt drops marginally by 0.1% in FY19: Finance Ministry

The central government’s debt as a percentage of gross domestic product (GDP) dropped marginally by 0.1% from 45.8% in fiscal 2017-18 to 45.7% or Rs 86.73 lakh crore in FY19, according to the Status Paper on Government Debt for 2018-19, compiled by the finance ministry in April.
Following a similar trend, the general government debt to GDP ratio, which includes the combined debt of the Centre and states, declined by the same percentage from 68.7% in March 2018 to 68.6% or Rs 1.3 crore crore (Rs 130 trillion) in March last year, the paper said.

Since 2010, the central government has been publishing an annual Status Paper on Government Debt that provides a detailed account of the overall debt position of the country. This was the ninth paper of the series.

The government’s finances were largely protected from currency risks as external debt stood at 2.7% of GDP or Rs 5.12 lakh crore in FY19. Further, as this was entirely from official sources, India was protected from volatility in international markets.

On the other hand, 94.1% of the Centre’s liabilities consisted of domestic debt in FY19, of which 84.4% or Rs 59.68 lakh crore was made up of marketable securities.

The holding pattern of these securities in March 2019 showed that 40.3% was held by commercial banks, 24.3% by insurance companies and 5.5% by provident funds.

Although banks still dominated the ownership patterns, the decline from 42.7% in March 2018 indicated a broadening of the market.

The government continued its efforts to reduce the roll-over risk of dated securities by elongating the maturity profile of its debt portfolio. However, the weighted average residual maturity of outstanding dated securities in March 2019 stood at 10.4 years compared to 10.62 years in March 2018.

The tenure of the longest security was 37 years.

The average interest cost (AIC) for the Centre remained unchanged over FY18 to FY19 at 7.1%. Thus nominal GDP growth net of AIC was 3.9% in FY19, however, this was within the limits of sustainable debt parameters.