Official sources told PTI that the tax-free bonds have had a good response and preliminary estimates put the investments around Rs 10,000 crore with practically all institutional and large investors opting for it.
With savings of around Rs 4,500 crore in cash outgo apportioned for US-64 redemption this year, the fiscal deficit is likely to be less to that extent, the sources said. Fiscal deficit is estimated to be 5.6 per cent of the GDP for this year.
The government had announced the five-year 6.75 per cent tax-free and tradeable bonds effective from June in a bid to reduce the redemption pressure. The annualised returns on the bonds work out to over 9 per cent, factoring the tax component, and this is attractive considering the lower returns from other saving instruments, they said.