The government’s offshore sovereign bond plan is expected to feature in the central board meeting of the Reserve Bank of India (RBI) on August 16.
The government’s offshore sovereign bond plan is expected to feature in the central board meeting of the Reserve Bank of India (RBI) on August 16. New economic affairs secretary Atanu Chakraborty will replace former finance secretary Subhash Chandra Garg on the RBI board.
The government has budgeted its FY20 gross market borrowing at Rs 7.10 lakh crore, and roughly a tenth of it ($10 billion) was expected to come through the overseas bond issuance. The proposal on overseas sovereign bond has not been shelved, though the transfer of Garg, an advocate of the plan announced in the Budget, to the power ministry added to speculations of a review of its contours either by the government or the central bank.
Under Garg, the DEA was in favour of issuing offshore sovereign bonds in tranches this fiscal — up to $2 billion in the first tranche — to test the appetite of foreign investors, a source had said earlier. After his transfer, Garg said he hadn’t heard anyone in the government complaining against the bond issue.
Sources had earlier said these papers could be issued only after the government firmed up its borrowing calendar for the second half of FY20 in September last week.
Several experts have questioned the government’s offshore bond issuance plan (former RBI governor Raghuram Rajan has cautioned against its temptation and even PM-EAC member Rathin Roy has sought a white paper on the issue). Even Swadeshi Jagaran Manch, an affiliate of RSS, has vehemently opposed the idea of selling the bonds in foreign currency.