 "Inclusion of bonds in global bond indices not an urgent concern: Mayaram")
“It would be interesting to be on the global indices, but it is not a matter which is emergent or so urgent that it would require an immediate decision,” Economic Affairs Secretary Arvind Mayaram said here on Thursday on the sidelines of an event organised by CRISIL.
According to Mayaram, there are deliberations going on. “The Reserve Bank of India (RBI) is fully engaged with this exercise. We must wait for the deliberations to end because you cannot have a presumption on a decision,” he added.
In his address, Mayaram said India was looking at making rupee settlements eligible in Euroclear debt platforms. “We can actually look at Euroclear and similar participation to make the bonds more internationally competitive,” he said.
As far as the corporate bond market was concerned, Mayaram said there had been little movement in bringing retail into corporate bonds. “We need to deepen the market and bring more retail participation. There is a need for investors education. The stakeholders must establish greater credibility. There are a lot of challenges. But we can overcome them. As far as the regulatory framework is concerned, a large number of measures have already been taken and more will be,” he said.
Guidelines on real estate investment trusts (Reits) and infrastructure trust funds are also in the offing. “We are looking at announcing the guidelines for Reits and infrastructure trust funds for infrastructure projects for pooling of investments. These will be announced very shortly,” he said.
Asian Development Bank (ADB) and other multilateral entities are considering issuing rupee-denominated bonds in overseas markets. “They (ADB) have just expressed their interest. They have not said to us what would be the size, etc, and the manner in which they want to do. We are waiting for their details to come in,” he said.
According to Mayaram, there is little sense of scepticism in the Indian market due to uncertainty. While international markets are bullish about India. “International Finance Corporation (IFC) raised about $100 million through overseas rupee denominated bonds with bond yields of about 7.7 per cent. It was subscribed two times. IFC may issue bonds at a lower yield in the next tranche. IFC plans to raise about $1 billion though rupee denominated bonds. ADB and IDFC has approached for issuing rupee denominated overseas bonds,” said Mayaram.
Mayaram is hopeful of seeing a rebound in growth soon. “We are quite hopeful of seeing a rebound in growth in third quarter numbers. In the last numbers that we had seen for the key sectors, the infrastructure core industries grew about 8 per cent. I cannot really predict how it would be. But we really hope that the trend continues. We expect with investments which are beginning to happen, growth should be able to claw its way out,” he said.
According to Mayaram the fiscal deficit target of 4.8 per cent of gross domestic product (GDP) remained intact for this financial year. “The finance minister has made a statement about the fiscal deficit line at 4.8 per cent is sacrosanct and will not be breached. Therefore, we are trying to maximise the revenues. We are hopeful that we will be able to reach near the target and then, whatever is required to be saved to be within 4.8 per cent, that will be done,” Mayaram said. The economic fundamentals are recovering. The market would go back to modest interest rate regime as investments pick up, he added.
Mayaram said the government had a well-established borrowing programme, which it would stick to for the current financial year. However, it will calibrate its debt sale plans according to market conditions. “We are mindful of what the going yields are and, therefore, calibrate the borrowing accordingly because markets fluctuate. It’s not that they are fixed at one point,” said Mayaram. According to Mayaram, RBI is expected to switch back to a more modest interest rate regime once India's investment cycle picks up.
The economic affairs secretary said he was bullish on disinvestments and telecom spectrum sale. “I think there will be a very good response,” he said.