The finance ministry is considering early redemption of some of the debt due September, after extra savings last year bolstered the state's cash pile, according to two officials with direct knowledge of the matter.
The government might consider redeeming Rs 20,000 crore ($3.7 billion) in advance, of the total Rs 46,000 crore of securities that were due in September, the officials said, on condition of anonymity. Policy makers would decide next month after the Budget deficit numbers for the year-ended March 31 were published, they said.
Finance Minister P Chidambaram aims to narrow the Budget shortfall to 4.8 per cent of gross domestic product this year to maintain an investment-grade sovereign rating. He may have started the financial year on April 1, with as much as Rs 1 lakh crore of surplus cash after reining in spending, the officials said.
The pile, more than the previous estimate of Rs 75,000 crore, is easing pressure from the redemptions, while savings last year may have trimmed the deficit to five per cent versus a target of 5.2 per cent, they said.
The government, planning to switch Rs 50,000 crore of debt maturing in the three financial years through March 2017 with longer-dated notes, may also consider using some of the cash to buy back Rs 20,000 crore of these notes in the second half of this financial year, they noted.
