The Central Bank helmed by Governor Shaktikanta Das has made use of all possible economic instruments to steer the economic nuances in this tumultuous year
The Reserve Bank of India has made another economically impulsive headline this month, as the banker to the government has issued a Third Marquee 10- year bond on a trot this year. A !0- year bond for better understanding Benchmark government bond is a debt security issued by the union government of India with an eventual maturity of 10 years. This bond is backed by a sovereign guarantee. Hence investors don’t face any default risk. This action comes into the picture, as the previously issued bond, back in August surpassed its 1 trillion thresholds of outstanding money.
The pandemic hit economic is on route to a rather sluggish recovery, as the much-touted V-Shaped recovery, appears virtually impossible. The government, due to the fiscal strain, has resorted to extensive borrowing by raising finances through issual of such bonds. As of this Bond, the government has managed to raise an amount of 8000 cr. (INR), at the coupon rate of 5.85 %. Before this, the RBI issued the first such bond of the year, at the beginning of the financial year on May 11, 20, wherein the government raised an amount of 1,11,618.58 cr. (INR) at a coupon rate slightly lower than the new bond, at 5.75 %. With the second bond raising an amount of 1,23,000 cr. (INR) at a coupon rate of 5.77 %.
This move of the RBI, according to many experts of the field is primarily to lower the value of such bonds from an investor perspective. Apart from that, the new bond that was a part of a Rs 28,000-crore bond auction has also said to have lead to some confusion in the market rates, due to rapidly changing benchmarks.
These developments come in just a few days after the release of recent figures of the status of the economy made headlines, wherein, as according to the official data the Indian economy contracted by 7.5 % in the second (July-September) quarter, pushing it to, what is now dubbed as a ‘technical recession’