Beyond fiscal deficit, lower T-Bills is just better optics

Beyond fiscal deficit, lower T-Bills is just better optics

The Ministry of Finance on Wednesday had reviewed its borrowing program and decided to trim the outstanding Treasury-bills (T-bills) but increase the debt through dated government securities (G-Secs).

According to a Finance Ministry statement, “The borrowing programme of the Government of India has been reviewed, with RBI, and following decisions taken: (i) The Government will trim down the T-Bills from present collections of ₹ 86,203 crore to ₹ 25,006 crore by March end, 2018. (ii) The Government will raise additional market borrowings of ₹ 50,000 crore only in fiscal FY18 through dated government securities.”

Effectively, the government maintained that between December 2017 and March 2018, there will not be any net additional borrowing as T-Bills will be run down by ₹61,203 crore and additional G-Sec borrowing will be ₹ 50,000 crore.

Most of the focus in the press was on the impact on fiscal deficit with analyst predicting a slippage of 0.3 per cent above the stated target of 3.2 percent. Regular commentators on the economy also said that the need for additional borrowing was driven by lower collections after the roll out of the Goods and Services Tax.

But the move to lower T-bills and push for G-secs also merits much attention. By doing this, Finance Minister, Arun Jaitley will be cleaning up the books of the current financial year at the cost of a diverted liability on a future government.

According to the Reserve Bank of India, Treasury bills or T-bills, which are money market instruments, are short term debt instruments issued by the Government of India and are presently issued in three tenors, namely, 91 day, 182 day and 364 day. Essentially this means that the government will return the amount that has been raised from the market in less than a year under the T-bill.

Now, according to the RBI, Dated Government securities are long term securities and carry a fixed or floating coupon (interest rate). The tenor of dated securities can be up to 30 years. According to the Finance Ministry statement, the G-Secs on offer in the current fiscal have a payback tenure ranging from 5 years to 20 years and above.

Effectively this means that the current government is lowering its short-term liabilities and passing them over to a future government.

Also, this is not some thing that the government has done hurriedly solely in light of lower GST collections. The government has had its eyes on the long term debt raising instruments for a while. A June 2017 circular raising the foreign portfolio investor investment limit in G-Secs reflects the government’s intention to encourage investments by them in this instrument.


Killing the hen, India’s gas pricing

Killing the hen, India’s gas pricing

Like most emerging economies, India too is dependent on fuel imports to meet its energy demand. The country bore a crude oil import bill of $64 billion in FY16 and effectively banks on imports to meet 80% of its’ oil consumption. Gas on the other hand paints a prettier picture with India meeting almost 60% of its demand through domestic production. But this data point only reveals a portion of India’s much messier natural gas story.

Gas is flared off from a flame boom aboard DCOR LLC's Edith offshore oil and gas platform in the Beta Field off the coast of Long Beach, California, USA, 18 May 2010. Senators from California, Oregon and Washington introduced legislation last week to ban offshore oil drilling off the West Coast amid mounting concern about the BP Deepwater Horizon rig spill spreading in the Gulf of Mexico. Photographer: Tim Rue/Bloomberg via Getty Images
Gas is flared off from a flame boom aboard DCOR LLC’s Edith offshore oil and gas platform in the Beta Field off the coast of Long Beach, California, USA, 18 May 2010.Photographer: Tim Rue/Bloomberg via Getty Images

Plagued by litigation over allegations of favoring industrialists and price curbs, domestic gas production has been on a steady decline. According to data compiled by EY, “the share of natural gas in the country’s primary energy mix declined from 10% in 2009 to 7% in 2014, compared with the global average of 24%, mainly due to a sharp drop in domestic supplies.” Global energy giant BP in its assessment of India’s energy market during 2015 notes that “gas production fell by 3.8%, its fifth continuous year of decline, 20 Billion cubic metres (Bcm) below the 2010 peak of 49.3 Bcm.” Continue reading “Killing the hen, India’s gas pricing”

HELP is not enough


“HELP is on its way!” quipped a senior official in India’s oil ministry a day before the union cabinet approved the new hydrocarbon policy. Oil minister Dharmendra Pradhan, while announcing the Hydrocarbon Exploration Licencing Policy, emphasised on its acronym HELP, hinting how his government believes that this is the panacea for India’s upstream hydrocarbon sector.

Oil pump at sunset
Oil pump at sunset (Courtesy:

Continue reading “HELP is not enough”

India and five pillars of energy

What #facebookdown taught me!

As I made my 9th frantic attempt to log in to facebook, I realised that the quest was futile. The familiar azure tint of Facebook was not comforting me anytime soon.

But how could it be? It’s FACEBOOK for god sake! Most of my other websites are connected to it. I hardly need to remember any passwords now. But what now?

How will I stay in touch through nonchalant ‘likes’ and cordial but mechanical smiles? Or feel ‘connected’ to my college mates?

With an elephantine communicator out of the picture, I resorted to archaic means. I called my friend on his birthday. I walked out of my house to congratulated my neighbours on their new car. Yes, talked to them, yes, in person.

#facebookdown has definitely raised questions about my preferences regarding communication. This bizarre habit of staring at an all familiar azure tint has murdered my interpersonal skills. It’s time I revive communication beyond comment boxes.

Envisaging India’s National Wind Energy Mission

New Delhi: Over the course of the past year, India’s ambitious solar energy plans have been consistently reaffirmed after the 100 GW capacity expansion plan for a whopping Rs 6 lakh crore. Relatively neglected is India’s wind generation ability and capacity. With an off-shore wind policy on the cards, the ministry of new and renewable energy (MNRE) is looking to re-launch India’s wind energy prospects.

Wind Energy projects in Kanyakumari, Tamil Nadu | Photo courtesy: Sindhu Hariharan
Wind Energy projects in Kanyakumari, Tamil Nadu | Photo courtesy: Sindhu Hariharan

Sources say that the new Off-Shore Wind Policy would seek international competitive bidding for projects. “The National Institute of Wind Energy (NIWE) would call for bids on behalf of MNRE. We expect keen participation from countries around the North Sea. States like Kerala, Karnataka, Goa, Tamil Nadu and Gujarat would benefit as they have immense offshore wind potential,” an official said. Continue reading “Envisaging India’s National Wind Energy Mission”

Energising India: Action before auction

Prime Minister Narendra Modi’s target of a 10 per cent reduction in oil imports has expanded the purview of “Make in India” to India’s ailing oil exploration sector.

Image courtesy:
Once an oil deposit has been accessed through a drill, pumpjacks are often placed over the well to pump out crude oil. Image courtesy:

Pressure is now building up on companies to extract more oil from the domestic blocks. Notably, only 15 per cent of the awarded Production Sharing Contracts (PSCs) for oil and gas finds have managed to yield. Of the 213 discoveries awarded so far, only 31 (20 crude oil blocks and 11 gas assets) are currently under production.

Continue reading “Energising India: Action before auction”