The share of scheduled commercial banks (SCBs) in the ownership of Central and State government securities has come down significantly in the last 10 years up to FY23, per a report by Bank of Baroda’s economic research department.

SCBs continue to remain the largest holders of (Central and State) government securities, but their share has declined considerably from 45.1 per cent in FY13 to 35.7 per cent in FY23. In FYTD24 (Financial Year To Date till September 2023), it is currently at 36.6 per cent, the report said.

Significant improvement has been seen in the share of insurance companies and ‘others’ (primarily driven by pension funds).

The share of insurance companies jumped to 26.3 per cent in FY23 from 20.7 per cent in FY13, and that of ‘others’ was up at 14.6 per cent in FY23 from 9.6 per cent in FY13.

“Significant improvement has been seen in share of insurance companies and ‘others’ (primarily driven by pension funds),” Sonal Badhan, economist at BoB, said in the report.

Interestingly, the share of RBI has declined from 13.3 per cent in FY13 to 9.7 per cent in FY23 (9 per cent as of FYTD24), and that of FPIs (foreign portfolio investors) has come down from 1.3 per cent to 0.9 per cent (1.1 per cent in FYTD24), she said.

Net borrowings

For both Centre and States combined, the outstanding ownership of government debt stood at ₹146-lakh crore as of March 2023, compared with only ₹42-lakh crore at the end of FY13, implying a growth rate of 13.4 per cent (CAGR basis). As of FYTD24 (till September 2023), the combined outstanding amount has risen to ₹155-lakh crore.

Between FY13 and FY23, the Centre’s net borrowings have risen by 8.5 per cent (CAGR), while state borrowings are up by 13.5 per cent, Badhan said.

In the case of Centre, net borrowing went up from ₹5.07-lakh crore in FY13 to ₹11.46-lakh crore in FY23, ₹11.80-lakh crore in FY24 (revised estimate/RE).

For States, net borrowing jumped from ₹1.47-lakh crore in FY13 to Rs 5.19 lakh crore in FY23. In FY24, States’ net borrowing is expected to be in the range of ₹6-6.5-lakh crore.

“Going ahead, we expect the outstanding amount of ownership of general government securities to increase to ₹162-163-lakh crore by the end of March 2024, up from ₹155-lakh crore as of September 2023 and ₹146-lakh crore as of March 2023,” Badhan said.