..... “On the face of it, it looks very odd that the Government promotes instruments of corporates and gives tax concession but does not extend the same treatment to its own instrument.” “This is being looked at from the Government side,” ........
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The Government Securities are a ‘neglected’ category, perhaps because they have a captive market as banks have to compulsorily hold huge quantities of G-Sec just to comply with SLR (Statutory Liquidity Ratio) requirements. Both the holding pattern of G-Sec and the ratio of G-Sec in SLR need to change. Government, in the present scenario should move to a situation where investment in G-Sec is attractive for retail investors as a more secure component in their savings. Banks also should be given other options to invest their SLR funds (May be the proposed Gold-backed financial instruments could be one such option). When all these are in a transition-phase, GOI and RBI should put off the idea of shifting management of public debt from RBI, at least for a decade.
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