Government Stock - Full Auction Results
Distilled Policy Brief
- The Reserve Bank of India (RBI) conducted a successful auction of Government Securities (G-Secs), including the ultra-long-term 7.43% GS 2076 and the 7.06% GS 2041, raising a total notified amount of ₹28,000 crore without any devolvement on primary dealers.
- The auction utilized both competitive and non-competitive bidding, where the non-competitive bidding facility allows retail investors to participate without bidding a specific price, thereby democratizing ownership of government debt.
- The zero devolvement on Primary Dealers indicates robust market demand and adequate liquidity in the banking system, helping the government secure long-term capital at stable Yield-to-Maturity (YTM) rates of 7.23% and 7.68% respectively.
🎯 Prelims High-Yield Examination Points
Non-competitive bidding in G-Sec auctions is open to retail investors, who are allocated shares at the weighted average rate of accepted competitive bids, while Primary Dealers act as underwriters to absorb unsold debt (devolvement).
⚖️ Mains Analytical & Syllabus Linkages
The issuance of ultra-long-term sovereign bonds (such as 50-year G-Secs) enables the government to fund long-gestation infrastructure projects, matches the long-term liability profiles of insurance and pension funds, and reduces rollover risks in public debt management.
🎯 UPSC Prelims Practice Drill
With reference to the auction of Government Securities (G-Secs) managed by the Reserve Bank of India, consider the following statements: 1. The non-competitive bidding facility allows retail investors to participate in G-Sec auctions without submitting a specific price or yield bid. 2. Zero devolvement on Primary Dealers during an auction indicates strong market demand and adequate liquidity to absorb the notified amount. 3. Primary Dealers are required to absorb the full notified amount of an auction regardless of the number of competitive bids accepted. Which of the statements given above are correct?
- [A] 1 and 2 only
- [B] 2 and 3 only
- [C] 1 and 3 only
- [D] 1, 2 and 3
▶ Reveal Official Answer & Analytical Explanation
Statements 1 and 2 are correct. The non-competitive bidding scheme allows retail participants to acquire G-Secs without quoting a specific price, thereby democratizing debt ownership. Zero devolvement on Primary Dealers reflects that competitive market demand was sufficient to cover the notified amount, signalling robust demand and adequate liquidity. Statement 3 is incorrect because devolvement on Primary Dealers only occurs when there is an unsubscribed portion in the auction.
🏛️ Historical Twin PYQ Anchor (2021)
Consider the following statements regarding the "National Clean Air Programme (NCAP)": 1. It is implemented by the Ministry of Environment, Forest and Climate Change. 2. Central Pollution Control Board acts as the sole regulatory executive body.