Quarterly indicative Schedule for issuance of Treasury Bills/Bonds under Market Stabilization Scheme (MSS) for the period from July 1, 2004 to September 30, 2004

Quarterly indicative Schedule for issuance of Treasury Bills/Bonds under Market Stabilization Scheme (MSS) for the period from July 1, 2004 to September 30, 2004:

A quarterly indicative Schedule for issuance of Treasury Bills/dated securities under Market Stabilization Scheme (MSS) covering the period from July 1, 2004 to September 2004 has been drawn up in consultation with the Government of India. The indicative schedule is as under:

Indicative Schedule for issuance of Treasury Bills/dated securities under MSS
(for the period from July 1, 2004 to September 30, 2004)

2. As was notified in the earlier quarterly schedule, the issuance of Treasury Bills under the MSS will be undertaken by increasing the notified amounts for the regular auctions of 91-day and 364-day Treasury Bills. Thus, the issuances under MSS covered by the above quarterly indicative schedule will be undertaken in addition to the regular issuances of Treasury Bills and dated securities.

3. The above indicative schedule is subject to variations depending on market conditions and other relevant factors. In addition to the proposed issuances indicated in the schedule, the Reserve Bank will also have the flexibility for additional issuances of Treasury Bills and dated securities depending upon the liquidity condition and other relevant factors.

4. It may be recalled, based on Memorandum of Understanding (MOU) reached between the Government of India and the Reserve bank of India on March 25, 2004, the MSS was implemented effective from the current fiscal year. Accordingly, with a view to providing transparency and stability in the financial markets, Government of India had issued the quarterly indicative schedule for issuance of Treasury Bills/ dated securities under MSS covering the first quarter of the fiscal 2004-05 on March 25, 2004.

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
NEW DELHI

Dated the 29th June, 2004

Auction for sale of Government of India Floating Rate Bonds, 2015 and auction for sale (Re-issue) of '6.13 percent Government Stock, 2028

Government of India have announced the sale of Floating Rate Bonds (FRB)of 11 year tenure, for a notified amount of Rs. 6,000 crore through auction using uniform price format. The bonds will carry an interest rate, calculated by adding a ‘spread’ to a variable base rate. The ‘spread will be decided in the auction to be conducted by Reserve bank of India and will remain unchanged during the currency of the bonds. The variable base rate will be the average rate of the implicit yields at cut-off prices emerging in the three auctions of ‘Government of India 364 day Treasury Bills’ immediately preceding the relative annual coupon reset date. The variable base rate for calculation of interest for the first year, i.e., from July 2, 2004 to July 1, 2005 as per the aforesaid formula is 4.52 per cent per annum. The base rate for the subsequent annual coupon periods, worked out as per the aforesaid formula, will be announced by RBI on or before the commencement of the respective coupon period.

2. Government of India have also announced the sale (re-issue) of “6.13 per cent Government Stock, 2028” for a notified amount of Rs.2,000 crore (nominal). The Government Stock will be sold through price based auction using multiple price method.

3. Up to 5% of the notified amount of the sale of both the securities will be allotted to eligible individuals and Institutions as per the Scheme for Non-Competitive Bidding Facility in the Auction of Government Securities.

4. The auctions for issue of both the securities will be conducted by Reserve Bank of India, Public Debt Office, Fort, Mumbai on July 1, 2004 (Thursday).

5. Bids in the prescribed form obtainable from the Regional Director, Reserve Bank of India, Mumbai Office (Public Debt Office), Fort, Mumbai-400 001 and Reserve Bank of India web site www.rbi.org.in should be submitted to that Office on July 1, 2004. The competitive bids by the NDS members should be submitted only in electronic format using NDS, while all the non-competitive bids should be submitted in the prescribed physical form. All bids should be submitted by 12.30 P.M.

6 The results of the auctions will be announced on July 1, 2004 and payment by successful bidders will be during banking hours on July 2, 2004 (Friday).

GOVERNMENT OF INDIA
MINISTRY OF FINANCE
DEPARTMENT OF ECONOMIC AFFAIRS
NEW DELHI

1. The Department of Economic Affairs, Ministry of Finance, has been presenting a Status Report on India’s External Debt on a regular basis since 1993. The Tenth Status Report released today analyses India’s external debt situation covering the data from March, 1991 to December, 2003 on the basis of the debt statistics which were already published. However, the data are updated wherever necessary. The Report presents an international comparison looking at India’s external debt position in a global perspective. Cross-country comparison is drawn on the basis of the Global Development Finance, 2004 which has just been released by the World Bank.

2. In absolute terms, India’s external debt stood at US $ 112.1 billion as on December 31, 2003 as against US $ 105.3 billion as on December 31, 2002 representing an increase of US $ 6.8 billion over the year. The increase is explained by surge in NRI deposits, while other components broadly offset each other.

3. External debt indicators have improved in the recent years. For example, debt to GDP ratio declined from 28.7 per cent in 1990-91 to 20.2 per cent in 2002-03. The rate of accumulation of external debt came down in the last decade as policy focus shifted in favour of non-debt creating flows such as foreign direct Investment and portfolio investment. Other critical indicators such as ratios of short-term to total debt and short-term debt to foreign currency assets too have improved over the years. Debt service payments as a proportion of current receipts (debt service ratio) declined from 35.3 per cent to 15.8 per cent during this period. However, debt service ratio rose to 18.1 per cent during April-December, 2003 mainly because of redemptions of Resurgent India Bonds (RIBs). If redemptions of RIBs are excluded, the debt service ratio works out to 11.1 per cent.

4. In terms of international comparison, among the top fifteen debtor countries of the world, India improved her rank from third debtor after Brazil and Mexico in 1991 to eighth in 2002 after Brazil, China, Russian Federation, Mexico, Argentina, Indonesia and Turkey (Table). Under the indebtedness classification, the World Bank upgraded India from moderately indebted to less indebted country in 1999. Besides, India’s external debt indicators compare well with that of other developing countries based on the World Bank’s Global Development Finance, 2004. For example, the ratios of short-term debt to total debt and short-term debt to foreign exchange reserves are the lowest. While the ratio of concessional to total debt is the highest, the debt to GNP ratio is the second lowest after China in the year 2002.

5. The complete Report is available on Ministry of Finance Website-http://www.finmin.nic.in

Table : International Comparison - External Debt of Top Fifteen Countries, 2002

Sl.No.	Country	Total External Debt	Debt to GNP Indebtedness
		(US $ million)	(ratio as per cent) classification
1	Brazil	227,932	52.5 Severe
2	China	168,255	13.4 Less
3	Russian Federation	147,541	43.3 Moderate
4	Mexico	141,264	22.6 Less
5	Argentina	132,314	138.4 Severe
6	Indonesia	132,208	80.3 Severe
7	Turkey	131,556	72.7 Severe
8	India	104,429	20.7 Less
9	Poland	69,521	37.2 Less
10	Philippines	59,342	71.4 Moderate
11	Thailand	59,211	47.6 Moderate
12	Malaysia	48,557	54.9 Moderate
13	Chile	41,945	68.1 Moderate
14	Hungary	34,958	54.4 Moderate
15	Colombia	33,853	43.3 Moderate
	SAARC Countries
1	Pakistan	33,672	56.5 Moderate
2	Bangladesh	17,037	34.2 Less
3	Sri Lanka	9,611	58.9 Moderate
4	Nepal	2,953	53.3 Moderate
5	Bhutan	377	70.4 Severe
6	Maldives	270	44.8 Less
Source: Global Development Finance 2004, The World Bank.

F.No.1(12)/2004-EDMU
New Delhi, June 15,2004

The Press Information Bureau is requested to give wide publicity to the above.

(Yogesh Chandra)
Adviser (EDMU)

Ms. Deepak Sandhu,
Additional Public Information Officer,
Ministry of Finance,
North Block