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India is working on operational details of the overseas bond sale that was announced in this year’s Union Budget, according to a government official.
Details like currency used to raise money, number of offers and tenor of bonds are still being deliberated, the official told reporters today.
Finance Minister Nirmala Sitharaman, in her budget speech early last month, had said the government would start raising a part of its gross borrowing in external markets in foreign currencies. That led to opposition from the Prime Minister’s Office. The former finance secretary, Subhash Chandra Garg, who was overseeing the bond sale, was transferred to the power ministry.
The official cited earlier said the risks associated with the overseas bond sale, including depreciation in the rupee, will be addressed as part of the process.
This would be the government’s maiden foreign currency bond sale, the official said, adding that it shouldn’t just be looked upon as a fiscal financing tool as it will give a better estimate of India’s macroeconomy.
The government and the central bank would collectively decide who would manage the overseas borrowings, the official said. For the market to mature, the government, according to the official, thinks there needs to be more tenors and offerings so that investors continue to hold such bonds.