Government has not decided on issuance of sovereign bond overseas to finance the burgeoning current account deficit, Economic Affairs Secretary Arvind Mayaram said on Thursday.
“I’ve no idea how you have understood that there is going to be a sovereign bond. The Government hasn’t said that we are going to be launching a sovereign bond, so why is this question coming again and again,” he told reporters after the Reserve Bank of India’s board meeting here.
He was replying to a specific question on the timing and quantum of the much-talked about sovereign bond issue.
There are talks among the market participants that the government may either sell sovereign bonds or issue non-resident bonds to save battered rupee and fund current account deficit.
Rupee has fallen over 12 per cent so far in this fiscal against the dollar. The currency fell to a lifetime intra-day low of 61.80 against the US unit on August 6.
The country’s CAD, the difference between forex inflows and outflows, touched an all-time high of 4.8 per cent of gross domestic product last fiscal.
RBI Governor D Subbarao had expressed reservations over the issuance of sovereign bonds. “Among the menu of options, sovereign bond issue is the least preferred...that’s the RBI view,” he had said during an interaction with analysts after first quarter monetary policy review on July 30.
Finance Minister P Chidambaram had said that the option of sovereign bond issue was on the table, but the Government would not rush into a decision.
He had said the issuance of sovereign bond could be considered by cash-rich public sector entities.
Meanwhile, on issuance of NRI bonds, State Bank of India Chairman Pratip Chaudhari reiterated his position that such financial products are difficult to distribute in retail and also to a particular ethnic group.
