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Govt has not stated it plans sovereign bonds: Mayaram

The Union 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 6 August.

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 30 July. HDFC chairman Deepak Parekh on Thursday said the country will not go for sovereign bond, but declined to elaborate.

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. Asked whether the government would come out with more measures to support rupee, Mayaram said, 'I think you should wait till the end of the week...the Finance Minister will be talking about this later.'

Meanwhile, on issuance of NRI bonds, SBI Chairman Pratip Chaudhari reiterated his position that such financial products are difficult to distribute in retail and also to a particular ethnic group.
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