Government's gross liabilities rose 2.2% sequentially in June quarter

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₹159.54 trillion at the end of Q1 FY24 from ₹156.09 trillion at the end of Q4 FY23. The Indian government’s fiscal deficit during the first five months of the current financial year stood at ₹6.43 trillion, or 36% of the annual estimates of ₹17.87 trillion, according to the data released by the Controller General of Accounts on Friday.

This was largely due to a sharp jump in capital expenditure, which was offset by lower tax devolution to state governments, and an increase in non-tax revenues. The fiscal deficit arises when the government expenditure, which includes its expenditure to service debt, exceeds its revenue in a given fiscal year.

Meanwhile, the yield on the 10-year benchmark government security softened from 7.31% at the close of the quarter on March 31, 2023, to 7.12% at the close on June 30, 2023, thus softening by 19 bps during the quarter, the finance ministry statement said. "In secondary market, trading activities were concentrated in 7–10-year maturity bucket during the quarter mainly because of more trading observed in 10-year benchmark security," it added.

The government said that foreign banks, insurance companies, private sector banks and primary dealers were net sellers of its debt while public sector banks, cooperative banks, FIs, mutual funds and ‘others’ were net buyers in the secondary market. On September 22, JP Morgan said it will include Indian government securities (bonds) in its widely tracked emerging market debt index, a move that is likely to prompt billions of dollars of inflows into the world's fifth-largest economy.