NEW DELHI: The government and Reserve Bank of India will finalise plans for the countrys first overseas sovereign bond issue by September when the Centres second quarter borrowing programme is finalised, finance secretary Subhash Chandra Garg said on Saturday. He asserted that India would command rates comparable with major countries despite its credit rating being lower than several emerging markets.
“The policy announcement has been made that India will be issuing sovereign bonds. For many years we were debating, now the government has taken a call,” Garg told TOI. How much and when to raise, in which markets, should it be one issue or more are all questions which we will now determine,” finance secretary Subhash Chandra Garg said.
Overseas borrowing may help RBI cut rates
The move to raise funds overseas using the sovereign borrowing route marks a dramatic shift in the countrys economic policy. While the issue has been debated and discussed for long, successive governments had shied away from taking the plunge. The issue of sovereign bonds opens up a funding route for the government at a time when it is faced with a funds crunch and has to stick to a fiscal consolidation road map.
“There are a number of countries which have issued sovereign bonds like China, the Philippines, and Malaysia. We will get much better rates than them. There is a really good demand for Indian paper,” said Garg.
The finance secretary said the government had undertaken a feedback exercise and is confident of getting a good deal for Indian sovereign bonds and said there would be no impact of the low sovereign credit rating.
Overseas money markets are flush with funds and are on the lookout for better returns on their investment and officials say India provides an opportunity for their investment to fetch better returns. Some experts have attributed the decision to the governments confidence over the countrys economic prospects.
“There is so much demand for Indian paper. Even our sub-sovereignsRead More – Source