The objective of the debt management strategy (DMS) is to secure the government’s funding at all times at low cost over the medium /long—term while avoiding excessive risk

MUMBAI: With an aim to better manage public borrowing, government plans to switch Rs 50,000 crore high cost debt each in year ending March 2017 and 2018 into instruments of longer term maturity.

While releasing Medium-Term Debt Management Strategy (MTDS), the Finance Ministry said the objective of the debt management strategy (DMS) is to secure the government’s funding at all times at low cost over the medium /long—term while avoiding excessive risk. The MTDS is developed for the period 2015—16 to 2017—18 based on the outstanding government market borrowing as on end—March 2015. “Switches of Rs 30,000 crore are expected to be conducted in 2015—16 and Rs 50,000 crore each in 2016—17 and 2017—18,” said a scenario analysis appended as part of the MTDS document. It also said the borrowing cost in the domestic market is expected to be lower in fiscal year 2015-16 due to reversal in the interest rate cycle. “With an objective to smoothen redemptions, switching of short tenor bonds maturing at proximate years with long-tenor bonds will be undertaken and is expected to reduce rollover risks. “To take the process forward, ‘switch calendar’ would be announced with a focus on effective liability management,” the Ministry said. Government resorts to market borrowings to meet its fiscal deficit. The MTDS has been prepared in consultation with the Reserve Bank of India. The strategy document contains the objectives, risk analysis of government borrowings and strategy to be followed. — PTI