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Exchange Rate Appreciation: A Major Policy Reversal

There has been a sharp appreciation in the value of the rupee against the dollar in recent weeks, a change in policy track from the tightrope walk of promoting export competitiveness while holding the cost of imports. This policy change, occasioned by the continuing upsurge in capital inflows, is intended to combat inflation but it is cause for worry since any major appreciation in the value of the rupee will have a direct impact on export growth and therefore on the current account deficit as well. It will, at the same time, not help fight inflation, since prices are rising due to domestic supply shortages and growing liquidity.

Money market

Exchange Rate Appreciation:A Major Policy Reversal

There has been a sharp appreciation in the value of the rupee against the dollar in recent weeks, a change in policy track from the tightrope walk of promoting export competitiveness while holding the cost of imports. This policy change, occasioned by the continuing upsurge in capital inflows, is intended to combat inflation but it is cause for worry since any major appreciation in the value of the rupee will have a direct impact on export growth and therefore on the current account deficit as well. It will, at the same time, not help fight inflation, since prices are rising due to domestic supply shortages and growing liquidity.

EPW RESEARCH FOUNDATION

I Rising Value of the Rupee

A
sudden and sharp appreciation of the rupee vis-a-vis the US dollar in recent weeks appears to be a case of major policy reversal in order to use the exchange rate weapon to fight inflation; this shows a degree of desperation on the part of the authorities as they are seemingly unsuccessful in controlling inflation with the series of monetary and fiscal measures taken so far. Until early March, the Reserve Bank of India (RBI) continued with the stance of strongly intervening in the forex market to moderate the degree of appreciation of the rupee. During February, the RBI purchases of foreign currencies had totalled $ 11.86 billion against $ 2.80 billion in January (Table 1), and despite large forex inflows, the rupee was not allowed to appreciate in that month; in fact the rupee depreciated by about 20 paise. But, thereafter from a level of Rs 44.56 per dollar on March 6, the rupee value has been allowed to climb to Rs 41.07 on April 27, thus recording a gain of over 8 per cent within a period of a month and a half. The situation obviously has been an unenviable one for the RBI, for the persistently large capital inflows have been putting tremendous pressure on the rupee to appreciate when the country’s export momentum was getting eroded and the merchandise deficit widening. The resulting interventions in the market only further augmented liquidity in the system. The country’s foreign exchange reserves bulged by $ 7.41 billion during the four weeks ending April 13, on top of an unprecedented inflow of $ 46.82 billion during 2006-07. (In fact, somewhat more if the US dollar depreciation against other reserve currencies is taken into account.) The change of policy track on the part of the authorities implies that the time-tested strategy of sustaining export competitiveness by a method of tightrope walk ensuring that the rupee did not appreciate beyond a point (though there being no set target), has been given a go-by.

While the macroeconomic and operational implications of the sudden appreciation, significant as they are, do not appear to be as yet serious, the portents can be worrying. Almost all market operators have already begun to predict that the rupee may even touch the Rs 40-mark soon. In any case, the expectations are that the movement will be in one direction thus opening up the possibilities of speculation and arbitraging, that is, the recurrence of the situation that prevailed during 2002 and 2003, when similarly the US dollar was depreciating and the rupee was appreciating against that currency in the wake of a sizeable capital inflow. Thus, the potential for creating instability and further overvaluation of the rupee does exist. This is all the more so because there now exists a more liberal environment for the market participants to operate in the forex market.

More serious is the potential implication for the economy’s export competitiveness. The situation as yet has not become serious but the direction again portends a worry. In mid-March when the rupee was ruling at Rs 44.15, the REER had shown about a 6.5 per cent or 8.0 per cent appreciation against the 1993-94 or 2004-05 base, as the case may be. But since then the rupee has again strengthened by about 7 per cent vis-a-vis against the US dollar when it has also strengthened against the euro, British pound sterling and Japanese yen as well as the Chinese yuan. And with India’s relative inflation remaining firm, the chances are that the effective rate of the rupee would have further risen quite significantly.

There is yet another aspect of the effective exchange rate arrangement which should be worrying. When the country is trying to diversify its trading pattern in favour of the developing countries, particularly those in the south-east region, the strengthening of the rupee against the dollar results in the rupee appreciating against those currencies, for all those countries maintain willy-nilly undervalued currency stances. For instance, as of January 2007, the latest period for which data are available, the six-currency NEER stood at 68.97 while the 36-currency NEER stood at 87.23 (both at 1993-94=100), thus clearly implying that the rupee has appreciated in nominal terms against the basket of currencies outside the six-currency set. The rupee’s exchange rate against the Chinese yuan is a specific case in point. The rupeeyuan exchange rate was ruling at Rs 5.75 per yuan in early March 2007 but thereafter with the general appreciation of the rupee, the rupee-yuan rate has strengthened to Rs 5.46 as on April 19, 2007.

Table 1: RBI’s Foreign Currency Purchases in the Recent Period*

Month $ Million

November 2006 3,198 December 2006 1,818 January 2007 2,830 February 2007 11,862

* Including purchases leg under swaps and forwards.

Economic and Political Weekly April 28, 2007

Weighted Average (Per Cent)

Graph A: Trends in WeightedGraph B: Spot Quotations for II Averages of Call Rates, Repo Rates,the US Dollar in the Domestic

Money, Gilt-Edged and

CBLO Rates and Call MoneyInter-Bank Market Borrowing – March 2007 Forex Markets

57

25.5

50.0 52

The money and government securities

47 42 37 32 27 22 17

market remained unsettled in March as the

20.5 48.0

il i Monthly Averages (Jan 2001 to Feb 2007) (Daily Working Days Mar 2007)

15.5

10.5

5.5

(Rupees Thousand Crore)Rupees per US dollar

RBI preferred stringent measures with a

view to target inflation and inflationary

expectations. The measure originated in

the need to contain mounting liquidity,

following huge and persistent foreign

exchange inflow calling for sterilisation

activities as reflected in sizeable reverse

46.0

44.0

repo bids in February. With inflation rul

ing above the threshold tolerance level set

by the RBI, concerted efforts such as

0.5

March 2007

ll l

-i

Call Money Volume (Rs Cr)

Repo Rates – Outside the RBI 42.0

imposition of limits on LAF reverse repo

ll

Call Rates

CBLO Rates

under modified arrangements, and on inter-

The exchange rate policy has been one such a policy would be disastrous. The bene-bank liabilities and revival of dated secuof the many factors, the others being a fits of external trade, necessary for sustain-rity absorptions under MSS, which are of policy environment conducive for export-ing high growth in the domestic economy, a durable nature, were undertaken by the orientation of domestic manufactures in-will not be realised and the economy cannot RBI. Though the government reduced the cluding trade promotion measures, that sustain a current account deficit of more size of the normal dated securities auction, have contributed to the country’s export than 2.5 per cent or so of GDP – a situation liquidity was mopped up every week under competitiveness and to the raising of India’s which is very likely to cross if the current modified MSS arrangements alongside share in world exports from 0.8 per cent trends in export-import trade continue. some absorption through state government during 2003 and 2004 to 1.0 per cent

during 2005 and 2006. But, the slackening Table 3: Weighted Averages of Daily Call/Notice Rates in Per Cent Per Annum:Simple Statistical Characteristics

of export growth in the recent period puts a question mark on the target of reaching Month/Week Simple Standard Coefficient Simple Standard Coefficient Mean* Deviation of Variation Mean* Deviation of Variation

even such a modest share as 1.5 per cent

(Percentages)$ (Percentages)$

by 2009. No doubt, India cannot pursue

Call Money Notice Money**

such an aggressive policy of export com-

February 2007petitiveness with a strongly undervalued All four weeks 7.34 0.64 8.65 7.31 0.75 10.32

23 7.37 0.82 11.16 6.98 0.87 12.44

exchange rate as pursued by China, for we

16 (RF)* 6.92 0.55 7.97 7.16 0.93 12.94are more sensitive to its inflationary im-9 7.43 0.62 8.39 7.45 0.67 9.04 2 (RF)* 7.72 0.06 0.81 7.81 0.09 1.17

plications. Nor can we pursue, at the same

March 2007time, an appreciating exchange rate All five weeks 12.02 13.00 108.16 8.92 9.44 105.81 30 (RF)* 23.21 19.06 82.14 19.03 19.70 103.49

arrangement with the control of inflation as

23 23.29 16.90 72.57 9.62 6.34 65.84the goal. The rate of inflation, which is 16 (RF)* 5.61 0.54 9.67 6.04 1.79 29.64

9 5.61 0.33 5.83 5.75 0.49 8.57

determined by domestic factors of supply

2 (RF)* 6.12 0.07 1.08 5.96 0.11 1.79

shortages and a liquidity upsurge, is un

** Separate reportings began on March 15, 2005.

likely to be dented by rupee appreciation

* Including data for reporting Fridays (RF). $ Based on original unrounded figures.and the macroeconomic consequences of Source: RBI.

Table 2: Money Market Operations (RBI’s Daily Data)

Average March 2007 Average February 2007
Items for Five for Four
Weeks 30(RF) 2 3 16(RF) 9 2(RF) Weeks 2 3 16$ 9 2(RF)
No of working days 2 8 5 5 6 6 6 2 0 6 5 6 3
Call Money
Weighted average of call rates:
per cent (weekly range) per annum 5.27-55.59 9.94-55.59 8.20-52.00 5.27-6.71 5.30-6.23 6.05-6.22 6.18-8.08 6.18-8.08 6.51-7.81 6.28-7.83 7.63-7.76
Daily averages (Rupees crore) (55.59) (6.71) (6.05) (7.81) (7.63)
Total call market borrowings 19807 12706 8860 10616 10325 8954 10277 11011 10434 10849 8119
(8999) (1417) (454) (380) (331)
Notice Money
Weighted average of notice money rates:
per cent (weekly range) per annum 4.86-52.10 10.71-52.10 7.94-15.62 5.00-9.68 4.86-6.23 5.86-6.10 5.75-8.22 5.75-8.00 6.30-8.22 6.63-8.21 7.73-7.91
Daily averages (Rupees crore) (52.10) (6.68) (6.10) (8.09) (7.87)
Total notice market borrowings 4722 1455 3411 2705 2556 2095 2971 4170 2590 3054 2483
(5135) (14957) (12442) (14942) (15238)
Turnover in term money market 505 1066 246 462 419 381 339 415 217 413 269
(borrowings)$$ (2753) (468) (653) (215) (300)

* Data for reporting Fridays are given within brackets and they are also included in the weekly range/daily averages. $$ No of reporting/traded days is fewer than given above. $ Thursday data.

Economic and Political Weekly April 28, 2007

Graph C: Annualised Forward Premia in Graph D: Yield Curves for Datedborrowings. Besides, the huge advance taxPercentage for the US Dollar in theSecurities – Weighted Averages for

outflows, along with second reporting

Domestic Inter-Bank Market and WeightedWeeks of March 2007
7.5 2nd Week 3rd Week 5th Week4th Week1st Week
Friday on March 16 and prospects of
Averages of Call Rates for March 2007 9

62.0

bankers’ strike, pushed the money market

Yield (per cent per annum)

into turmoil with call rates touching ex

8.5

orbitant levels despite huge liquidity in

Working Days ---iWeighted Averages of Call Rates (Right Axis) 1-month 3-month 6-month

jection by the RBI. However, it was only

Per cent per annum

42.0 8

after the RBI assured normal functioning

for inter-bank lending and banks withdrew

their strike that the call rates eased. Also,

the finance minister assured the market

that the liquidity crunch was a temporary

7

22.0

phenomena and that the situation would

improve with the beginning of spending

6.5

by various government departments.

2.0 2 3 4 5 6 7 8 9 10111213141516171821222327293031

Years to Maturity Amidst this, the RBI continued to mop up through MSS borrowings while continu-

Table 4: Comparison of Call, Overnight CBLO and Repo Rates

ing to inject huge liquidity through repo.
Week-Ending Weighted Average Rates Daily Average Volumes Even in the last week of the month when
2-Feb-07 9-Feb-07 15-Feb-07 Call 7.79 7.42 7.08 (in Per Cent) Overnight CBLO 7.35 6.83 6.76 Repo 7.45 7.10 6.77 Call 10200 13284 13685 (Rs Crore) Overnight CBLO 12750 19848 18674 Repo 5584 8030 7593 year-end pressures on liquidity emerged coinciding with the last reporting Friday of the financial year, the RBI not only undertook MSS auction but it did so for
23-Feb-07 2-Mar-07 7.37 6.10 6.80 5.85 6.98 6.02 13414 12975 19932 20146 7812 10391 a larger amount. After the close of market
9-Mar-07 16-Mar-07 23-Mar-07 5.50 6.27 24.59 5.01 5.21 10.22 5.12 5.40 11.73 12881 13321 12271 21123 19752 14199 10374 11585 5575 hours on March 30, the RBI surprised the market by increasing the repo rate by 25
30-Mar-07 24.03 11.10 12.37 14161 13916 4838 basis points from 7.50 per cent to 7.75 per
Source: The Clearing Corporation of India (CCIL). cent and cash reserve ratio by 50 basis
Table 5: Details of Central Government Market Borrowing: March 2007

(Amount in Rs Crore)

Date of Nomenclature Type of Notified Competitive Bids Competitive Bids Indicative YTM at Cut-off Devolvement on Auction of Loan Auction Amount Received Accepted Price (in Per Cent) Primary Dealers Number Amount Number Amount (Rs Crore)

6-Mar-07 6.65 per cent 2009 MSS 6000 201 13340 86 6000 7.87 per cent (Rs 97.70) NA 14-Mar-07 6.65 per cent 2009 MSS 2000 105 4973 60 2000 7.96 per cent (Rs 97.55) NA 22-Mar-07 6.65 per cent 2009 MSS 2000 164 8774 27 1999 8.01 per cent (Rs 97.49) NA 28-Mar-07 6.65 per cent 2009 MSS 6000 185 11012 132 6000 8.15 per cent (Rs 97.26) NA 9-Mar-07 8.07 per cent 2017 Normal 4000 239 11720 45 3979 8.06 per cent (Rs 100.05) Nil 9-Mar-07 8.33 per cent 2036 Normal 3000 165 8201 50 2996 8.40percent (Rs.99.22) Nil

Source: RBI Press Releases.

Table 6: Auctions of 91-Day Treasury Bills

(Amount in Rupees Crore)

Date of Notified Bids Tendered Bids Accepted Subscription Cut-off Cut-off Amount Outstanding Auction Amount Devolved Price Yield on the Date of Issue No Face Value No Face Value on PDs (Rupees) Rate

(Amount) (Amount) (Amount) (Per Cent) Total With RBI Outside RBI

(1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12)

2006 Mar 1 500.00 37 1479.10 22 500.00 0.00 98.36 6.69 13563.57 0.00 13563.57

  • (2) (461.82) (2) (461.82) [98.37] [6.65]Mar 8 500.00 41 1896.44 16 500.00 0.00 98.37 6.65 12797.67 0.00 12797.67
  • (2) (464.99) (2) (464.99) [98.37] [6.65]Mar 14 500.00 48 1661.96 14 500.00 0.00 98.38 6.60 14002.67 0.00 14002.67
  • (7) (1205.00) (7) (1205.00) [98.38] [6.60]Mar 22 500.00 48 2659.17 7 500.00 0.00 98.40 6.52 11017.82 0.00 11017.82
  • (2) (367.84) (2) (367.84) [98.41] [6.46]Mar 29 500.00 45 2730.15 4 500.00 0.00 98.50 6.11 16318.08 0.00 16318.08
  • (2) (5500.26) (2) (5500.26) [98.51] [6.05]

    2007 Feb 28 2000.00 103 6127.05 31 2000.00 0.00 98.17 7.48 35082.57 0.00 35082.57

  • (3) (4250.00) (3) (4250.00) [98.19] [7.39]Mar 7 2000.00 78 2843.55 65 2000.00 0.00 98.17 7.48 33582.57 0.00 33582.57
  • (0) (0.00) (0) (0.00) [98.25] [7.14]Mar 14 2000.00 100 4035.44 35 2000.00 0.00 98.17 7.48 83693.93 0.00 83693.93
  • (2) (5000.50) (2) (5000.50) [98.18] [7.44]Mar 21 2000.00 118 5035.00 18 821.50 0.00 98.05 7.98 85058.82 0.00 85058.82
  • (3) (1800.00) (3) (1800.00) [98.10] [7.77]Mar 28 2000.00 101 4705.40 53 2000.00 0.00 98.05 7.98 90228.57 0.00 90228.57
  • (2) (6000.00) (2) (6000.00) [98.07] [7.89]

    Figures in parentheses in cols 3 to 6 represent numbers and amounts of non-competitive bids which are not included in the total.Figures in the square brackets under cols 8 and 9 represent weighted average price and respective yield.

    Economic and Political Weekly April 28, 2007

    points in two phases on April 14 and 28 of 25 basis points each, absorbing liquidity worth about Rs 15,000 crore. Given the paramount importance placed on managing liquidity to contain inflation, the RBI allowed the rupee to appreciate sharply against the dollar breaching the Rs 44 mark and even touching Rs 43.14 in the second half of the month; in fact, in April it appreciated more sharply. In the corporate bonds market, the Sebi allowed NSE to also start a reporting portal similar to BSE as against the envisaged single unified exchange for corporate bonds market. The Orissa government undertook yet another buyback of a set of their securities. Interestingly, the market remained impervious of rate hike by the Chinese authorities and the US Fed holding the rates steady.

    Call Money Market

    Volatility again resurfaced in March exceeding much more than that seen in December 2006 with the standard deviations and coefficients of variation for call and notice money rates shooting up to

    13.77 and 9.44 and to 108 per cent and

    105.81 per cent, respectively (Table 3).

    The month began with the RBI undertaking measures to correct the money market yield curve. With the imposition of limits on the LAF repo window, the overnight rates eased. The month began with call rates ruling at 6.07 per cent and eased to 6.05 per cent on the first reporting Friday on March 2, but jumped to 6.23 per cent on March 3 and then dipped to 5.39 per cent on March 5 with the LAF restricting call money movements. Even outflows towards dated securities auction on March 9 impinged marginally on call rates to 5.59 per cent, which eased to 5.27 per cent on March 14. They rose to 5.50 per cent on March 15 and to 6.71 per cent on the second reporting Friday, March 16 (Table 2), but on the back of pressures on liquidity, the weighted average of overnight rates surged to 14.34 per cent on March 17 (Graph A). As a cumulative effect of advance tax outflows, implementation of 25 basis points CRR hike to absorb excess liquidity and scramble for funds in view of bankers’ strike towards the end of the month, the call rates skyrocketed to 52 per cent on March 21, and in intra-day trades they even touched 75 per cent causing some skirmish in the market. The situation was grim for those banks which were short of SLR securities and therefore had to rely on the overnight market for funds to avoid defaulting on CRR compliances. It was after the RBI clarified its position on arbitrage between LAF repo and overnight market and after allowing market participants to overcome temporary mismatches that the rates eased sharply to 21.3 per cent on March 22 and to 8.2 per cent on March 23. Again, the pressures re-emerged ahead of the financial year closing and the call rates began firming up; they jumped to 25.19 per cent on March 28 and then galloped to 55.59 per cent on March 30, the last reporting Friday of the year. Therefore, in the last

    Table 7: Auctions of 182-Day Treasury Bills

    (Amount in Rupees Crore)

    Date of Notified Bids Tendered Bids Accepted Subscription Cut-off Cut-off Amount Auction Amount Devolved Price Yield Outstanding No Face Value No Face Value on PDs (Rupees) Rate on the Date (Amount) (Amount) (Amount) (Per Cent) of Issue

    2006 Mar 8 500.00 28 1678.00 7 500.00 0.00 96.76 6.72 9137.23

    [96.77] [6.68]Mar 22 500.00 31 1753.50 3 500.00 0.00 96.81 6.61 9771.37

    [96.81] [6.61]

    2007 Mar 7 1500.00 53 2265.00 49 1500.00 0.00 96.28 7.75 19112.83

    (1) (500.00) (1) (500.00) [96.41] [7.47]Mar 21 1500.00 107 4195.00 13 530.00 0.00 96.07 8.20 18175.69

    (2) (325.00) (2) (325.00) [96.08] [8.18]

    Figures in the square brackets represent weighted average price and the respective yield. Figures in bracketsrepresent numbers and amounts of non-competitive bids which are not included in the total.

    Table 8: Auctions of 364-Day Treasury Bills

    (Amount in Rupees Crore)

    Date of Notified Bids Tendered Bids Accepted Subscription Cut-off Cut-off Amount Auction Amount Devolved Price Yield Outstanding No Face Value No Face Value on PDs (Rupees) Rate on the Date (Amount) (Amount) (Amount) (Per Cent) of Issue

    2006 Mar 1 1000.00 37 2646.00 9 1000.00 0.00 93.65 6.80 44260

  • (0) (0.00) (0) (0.00) [93.67] [6.76]Mar 14 1000.00 56 3441.00 21 1000.00 0.00 93.69 6.75 43266
  • (1) (17.00) (1) (17.00) [93.70] [6.72]Mar 29 1000.00 41 3996.00 11 1000.00 0.00 93.98 6.42 43016
  • (1) (750.00) (1) (750.00) [93.99] [6.39]2007 Feb 28 2000.00 65 4575.00 28 2000.00 0.00 92.84 7.73 50758
  • (0) (0.00) (0) (0.00) [92.91] [7.65]Mar 14 2000.00 94 4970.00 29 2000.00 0.00 92.76 7.83 52012
  • (2) (271.00) (2) (271.00) [92.80] [7.78]Mar 28 2000.00 118 10510.60 20 2000.00 0.00 92.63 7.98 53812
  • (1) (1550.00) (1) (1550.00) [92.67] [7.93]

    Figures in the square brackets represent weighted average price and the respective yield. Figures in brackets represent numbers and amounts of non-competitive bids which are not included in the total.

    Table 9: Profile of Major Commercial Bond Issues during March 2007

    Sr Issuing Company/Rating Nature of Coupon in Per Cent Per Annum Amount in No Instrument and Tenor Rs Crore

    FIs/Banks

    1 Bank of Maharashtra Bonds 9.90 per cent for 15 years 200 (100) AA by Crisil and Care

    2 Canara Bank Lower Tier II 9.90 per cent for 10 years 400 AAA by Crisil and Icra Bonds

    3 Canara Bank Upper Tier II 10 per cent for 15 years 500 AAA by Crisil Bonds

    4 City Union Bank NCD 10 per cent for 121 months 10 not available

    5 NABARD Bonds 9.55 - 9.65 per cent through book building 50 AAA Crisil and Care for 5 years

    6 Small Industries Bonds 9.60 per cent for 10 years 1000(500)Development Bank of India AAA by Care

    7 State Bank of India Lower Tier II 9.85 per cent for 111 months 500 AAA by Crisil and Care Bonds

    8 State Bank of Saurashtra Tier II Bonds 9.80 per cent for 9 years and 3 months 325(100) AAA by Icra and CareCentral Undertaking

    1 Power Finance Corporation NCD 9.90 per cent for 10 years 150 AAA by Crisil & Icra Total 3,135 Total for March-06 (a year ago): Rs 6,890 crore. Total for February-07 (a month ago): Rs 2,155 crore

    Note: The amount shown in brackets above denotes the greenshoe option of the issue. Source: Various media sources.

    Economic and Political Weekly April 28, 2007 week of the month, volume in the call market overshot those of CBLO (Table 4). These have occurred on the eve of RBI’s prudential limits imposed on the liabilities side of the inter-bank transactions becoming effective from April 1, 2007.

    Among the three short-term rates, the monthly weighted averages of CBLO and repo rates remained moderate at 7.76 per cent and 8.04 per cent, respectively, while that of the call market touched a high at

    13.18 per cent; also the standard deviation for the former two at 5.14 and 4.88 was much lower than that witnessed in the overnight market (Table 4).

    Forex Market

    In March, the rupee-dollar exchange rate appreciated to a eight-year high as authorities used the exchange rate to combat inflation and banks used it as an instrument of raising liquidity in view of the severe crisis in short-term money market. The rupee breached the Rs 44 psychological barrier and touched a high of Rs 43.14 – an eight-year high. This apparent strength of the rupee was attributed to the huge inflow of capital and was not warranted by the fundamentals. After an inflow of $ 14,144 million in February, which saw rupee depreciate by 20 paise due to the RBI intervention, there was further inflow of $ 4,842 million which saw an appreciation of 72 paise probably because RBI’s intervention was consciously weak. On an annual basis, the rupee stood upvalued against the US dollar and yen and depreciated against euro and pound sterling. Also, the rupee stands depreciated against Thai baht and South Korean won. Interestingly, the dollar, during this period, appreciated against most of the currencies.

    The month began with weakness in domestic and global equity markets following the unwinding of yen carry trades and spurring speculation of reversal of funds flow, and the rupee-dollar exchange rate depreciated from Rs 44.27 on March 1 to Rs 44.56 on March 6. But, following the recovery of the stock indices and exporters’ sale of dollars, the rupee began firming up touching Rs 44.22 on March 13. The strength was also supported on speculation that banks were selling dollars to raise rupee resources in the wake of liquidity pressures. However, with the RBI’s reported intervention, the rupee fell to Rs 44.31 on March 14, but as the intervention was weak, the rupee rose again to Rs 44.17 on March 16. In the second-half of the month, the liquidity crisis in the domestic market pushed the banks to arbitrage between the spot and forward markets as in December 2006 to raise rupee liquidity following the short-term rates skyrocketing and creating panic. In addition, the RBI chose to refrain from intervening in the market as containing inflation became the most significant objective of the central bank. Consequently, the rupee touched a peak of Rs 43.14 on March 28. However, along with month-end demand for dollars and short covering of open positions, the rupee depreciated to Rs 43.47 on March 29 and further to Rs 43.59 on March 30 (Graph B).

    The forward premia was influenced by a hardening of interest rates and pressure on liquidity, leading to firmness in premia across maturities but particularly at the short-end despite the spot rupee appreciating against the dollar. The one-month premia touched a peak of 15.76 per cent on March 26 exceeding the high of 8.62 per cent witnessed in December 2006 wherein the banks booked forwards by selling spot rupee to raise resources. As against the volatility witnessed in onemonth tenure, the three-month and sixmonth were relatively stable (Graph C).

    III Primary Market

    Dated Securities

    In March, the government deviated from the scheduled calendar of issuances by mobilising Rs 7,000 crore instead of Rs 8,000 crore. On March 9, the government reissued 8.07 per cent 2017 and 8.33 per cent 2036 for notified amounts of Rs 4,000 crore (instead of Rs 5,000 crore as per calendar) and Rs 3,000 crore, respectively. The yields set for the 29-year paper at 8.40 per cent was higher as against

    8.18 per cent in the previous month and for the 10-year paper the yield set was at

    8.06 per cent, as against 7.43 per cent set in November 2006 (Table 5).

    On March 13, 10 state governments issued 10-year loans for an aggregate amount of Rs 2,283.71 crore through a yield-based auction using multiple price auction method. The yield was set in the range of 8.25-8.45 per cent with the lowest being for Rajasthan and the highest for Jammu and Kashmir, as against a range of 8.10-8.45 per cent set in the previous month. On March 23, the government of Maharashtra auctioned 10-year loan for an amount of Rs 737.603 crore through a yield-based auction using multiple price auction at a cut-off yield of 8.35 per cent.

    In order to contain inflationary expectations, the RBI modified the MSS arrangements and after a gap of 18 months, resumed issuances of dated securities under MSS. Under the new arrangement, a mix of treasury bills and dated securities has

    Table 10: Operations of RBI’s Liquidity Adjustment Facility**

    (Amount in Rupees Crore)

    Range of Repo (Injection)* Reverse Repo (Absorption)* Net Injection Net For the Week Repo/RR Bids Received Bids Accepted Bids Received Bids Accepted (+)/ Outstanding (Feb 2007-Period Number Amount Number Amount Number Amount Number Amount Daily Averages Absorption (-) Amount Mar 2007) Days of Bids of Liquidity at the

    Accepted Week End@

    (1) (2) (3) (4) (5) (6) (7) (8) (9) (10) (11) (12) (13)

    29 Jan - 02 Feb 07 2-3 80 29980 80 29980 21 4225 21 4225 1408 25755 -7450 05 Feb - 09 Feb 07 1-3 36 22300 36 22300 36 5815 36 5815 1163 16485 1750 12 Feb - 15 Feb 07 1-4 24 11925 24 11925 52 13140 52 13140 3285 -1215 -5140 19 Feb - 23 Feb 07 1-3 55 18495 55 18495 51 20035 51 20035 4007 -1540 6940 26 Feb - 02 Mar 07 1-3 ----207 118810 207 118810 23762 -118810 22420 05 Mar - 09 Mar 07 1-3 ----197 125250 197 14991 2998.2 -14991 3000 12 Mar - 16 Mar 07 1-4 38 19725 38 19725 135 131795 135 12170 2434 7555 -19535 20 Mar - 23 Mar 07 1-3 244 160070 244 160070 3 320 3 320 80 159750 -42185 26 Mar - 30 Mar 07 1-4 184 112670 184 112670 20 5060 20 2845 711.25 109825 -28885 31 Mar - 05 Apr 07 1-4 74 37465 74 37465 21 6990 21 5681 1420.25 31784 -1455 09 Apr - 13 Apr 07 1-3 2 760 2 760 158 162570 158 14999 2999.8 -14239 3000

    Notes: * With effect from January 31, 2007 the Repo Rate is 7.50 per cent and Reverse Repo Rate 6.00 per cent.** Includes Second LAF Auctions under Repo and Reverse Repo. @ Net of Repo and Reverse Repo Outstandings.

    Economic and Political Weekly April 28, 2007

    Appendix Table: Secondary Market Operations in Government Paper: NDS and NDS-OM Deals

    (Amount in Rupees Crore)

    Descriptions Week Ending March 2007: Yield to Maturity on Actual Trading Total for the Month 30 23 16 9 2 of March 2007 AMT YTM CY AMT YTM CY AMT YTM CY AMT YTM CY AMT YTM CY AMT YTM CY

    1 Treasury BillsA 91-Day Bills 855.35 7.57 361.50 7.43 495.65 7.19 485.49 7.12 924.80 7.30 3122.79 7.34 B 182-Day Bills 143.00 7.49 835.45 7.69 390.64 7.33 592.42 7.44 350.95 7.10 2312.46 7.46 C 364-Day Bills 265.10 7.59 177.28 7.49 1012.39 7.51 841.24 6.98 622.34 7.53 2918.35 7.37

    2 GOI Dated Securities A Regular (Per Cent: Year)

    6.75,2007 ------2.00 7.30 6.78 ------2.007.306.78

    11.50, 2007 ---5.00 7.4811.27 ---------5.00 7.4811.27

    11.90 , 2007 48.11 7.26 11.82 795.31 7.81 11.82 139.97 7.60 11.80 430.62 7.06 11.78 160.89 7.38 11.78 1574.90 7.53 11.80

    12.50, 2007 ------------10.00 7.28 12.45 10.00 7.28 12.45

    9.50,2008 ------1.00 7.37 9.32 ------1.007.379.32

    11.40 , 2008 ------0.28 7.89 10.88 ---125.00 7.71 10.84 125.28 7.71 10.84

    11.50, 2008 ---------50.00 7.64 11.02 ---50.00 7.64 11.02

    12.00 , 2008 126.38 7.76 11.50 184.00 7.67 11.48 80.06 7.65 11.48 390.00 7.68 11.47 10.08 7.70 11.46 790.52 7.68 11.48

    12.10 , 2008 0.41 7.61 11.51 1.53 7.78 11.53 0.80 7.81 11.52 3.94 8.26 11.57 ---6.68 8.05 11.55

    12.25 , 2008 ------15.00 7.66 11.52 50.00 7.72 11.53 0.02 7.73 11.52 65.02 7.71 11.52

    6.65 , 2009 3590.02 8.03 6.82 547.04 7.94 6.81 446.85 7.87 6.81 1545.00 7.81 6.80 ---6128.91 7.95 6.81

  • 6.96 , 2009 OSB 20.00 8.27 7.13 45.00 8.40 7.15 165.00 8.40 7.15 230.00 8.31 7.14 85.00 8.35 7.15 545.00 8.35 7.14
  • 7.00 , 2009 ---10.09 7.99 7.14 ------0.45 7.86 7.12 10.54 7.99 7.14
  • 7.07 , 2009 OSB ------20.00 8.33 7.24 ---10.00 8.33 7.24 30.00 8.33 7.24

    7.33 , 2009 OMB ------50.00 8.30 7.46 100.00 8.30 7.46 ---150.00 8.30 7.46

    11.50 , 2009 ------50.00 7.85 10.73 ---1000.13 7.83 10.72 1050.13 7.83 10.72

    11.99 , 2009 ------0.04 7.94 11.15 75.00 7.70 11.09 ---75.04 7.70 11.09

    6.20,2010UTI SB 5.00 8.05 6.50 ------------5.00 8.05 6.50

    7.55 , 2010 175.25 7.98 7.64 1.12 7.91 7.63 0.49 7.64 7.57 100.54 7.87 7.62 47.34 7.81 7.61 324.74 7.92 7.63

    8.75,2010 ---0.009.258.89 ---------0.009.258.89

    11.50, 2010 0.05 7.8410.44 ------------0.05 7.84 10.44

    12.29 , 2010 ---------600.39 7.90 11.06 101.16 7.91 11.05 701.55 7.90 11.06

  • 8.00 , 2011 1.06 8.16 8.05 0.70 8.17 8.05 0.28 8.38 8.10 ---0.07 7.85 7.96 2.11 8.18 8.05
  • 9.39 , 2011 573.05 7.99 8.95 717.42 8.06 8.97 748.46 8.00 8.95 280.40 7.94 8.93 710.55 7.89 8.91 3029.88 7.98 8.94
  • 12.00 , 2011 ------25.00 8.02 10.43 0.67 8.01 10.42 2.33 8.02 10.42 28.00 8.02 10.43

    12.32 , 2011 5.00 8.07 10.84 ------5.00 7.84 10.74 10.00 8.06 10.80 20.00 8.01 10.79

    6.72 , 2012 ------0.50 6.88 6.77 0.50 7.21 6.87 ---1.00 7.05 6.82

  • 6.85 , 2012 ---0.05 7.94 7.17 0.08 8.41 7.31 ---20.00 8.00 7.19 20.13 8.00 7.19
  • 7.40 , 2012 17.07 7.95 7.57 59.05 7.94 7.57 47.00 7.88 7.55 15.18 7.90 7.56 137.30 7.87 7.55 275.60 7.89 7.56
  • 7.44 , 2012 OSB 165.00 8.44 7.75 35.00 8.49 7.77 25.00 8.48 7.76 100.00 8.48 7.76 ---325.00 8.46 7.76

    9.40 , 2012 0.18 8.08 8.89 0.18 8.33 8.99 ---------0.36 8.21 8.94

    11.03 , 2012 ------0.00 7.87 9.71 0.13 8.06 9.78 10.22 8.01 9.76 10.35 8.01 9.76

    7.27 , 2013 ------120.00 7.93 7.52 1.90 8.10 7.58 65.00 7.90 7.51 186.90 7.92 7.51

    9.00 , 2013 1.50 8.06 8.61 1.50 8.16 8.65 ------0.03 7.94 8.56 3.03 8.11 8.63

    9.81 , 2013 0.05 8.06 9.05 0.01 8.06 9.05 0.13 8.08 9.06 0.23 8.29 9.15 0.08 8.08 9.05 0.50 8.17 9.10

    12.40, 2013 ------------0.64 8.07 10.21 0.64 8.0710.21

    7.37 , 2014 1101.37 8.02 7.63 2141.67 8.01 7.63 3963.07 8.00 7.63 2875.32 8.01 7.63 4782.53 7.92 7.60 14863.96 7.98 7.62

  • 10.00 , 2014 ---------0.08 7.81 8.94 0.11 7.65 8.86 0.19 7.71 8.89
  • 11.83 , 2014 39.45 8.15 9.81 55.95 8.20 9.83 65.04 8.16 9.81 27.70 8.14 9.80 5.16 8.01 9.72 193.30 8.16 9.81
  • 7.38 , 2015 14.62 8.09 7.71 0.10 8.09 7.71 2.00 8.15 7.74 ------16.72 8.10 7.71

    7.59 , 2015 OSB 315.00 8.45 7.98 75.00 8.41 7.96 330.00 8.53 8.02 30.00 8.50 8.01 52.86 8.43 7.98 802.86 8.48 8.00

    7.61 , 2015 OMB 120.12 8.45 8.00 ---0.05 8.40 7.97 135.00 8.50 8.02 5.00 8.43 7.99 260.17 8.48 8.01

    9.81,2015 ------0.02 8.25 8.94 ------0.028.258.94

    10.70, 2015 ---------0.527.95 9.16 ---0.527.959.16

    11.43, 2015 ------------0.057.84 9.38 0.057.849.38

    11.50, 2015 ---2.008.419.75 ---------2.008.419.75

    7.59 , 2016 361.22 7.99 7.79 439.05 8.01 7.80 965.60 7.98 7.78 1003.52 7.99 7.79 2232.45 7.90 7.75 5001.84 7.95 7.77

    12.30 , 2016 0.50 8.12 9.70 16.00 8.15 9.72 ---------16.50 8.15 9.72

    7.46 , 2017 21.00 8.05 7.78 19.95 8.05 7.78 3.27 7.86 7.68 7.00 7.89 7.69 12.09 7.92 7.71 63.31 8.00 7.75

  • 7.49 , 2017 0.13 7.97 7.74 6.20 8.14 7.84 ---------6.33 8.14 7.84
  • 8.07 , 2017 1657.29 7.97 8.02 2434.55 8.00 8.03 3536.11 7.97 8.02 1406.70 8.00 8.04 2497.84 7.90 7.98 11532.49 7.96 8.01
  • 5.69 , 2018 3.63 8.29 7.02 1.00 8.19 6.97 3.42 8.18 6.97 ---1.42 8.12 6.94 9.47 8.22 6.99
  • 6.25 , 2018 25.88 8.13 7.21 9.24 8.24 7.27 18.23 8.17 7.23 0.29 8.08 7.19 1.56 8.05 7.17 55.20 8.16 7.23
  • 10.45 , 2018 0.04 8.17 8.98 0.02 7.94 8.83 5.20 8.14 8.96 5.18 8.20 8.99 1.42 8.07 8.91 11.86 8.16 8.97

    5.64,2019 1.008.377.06 ------------1.00 8.37 7.06

    6.05 , 2019 5.09 8.23 7.25 3.60 8.27 7.28 3.62 8.19 7.23 3.53 8.16 7.22 3.53 8.10 7.18 19.37 8.19 7.23

    10.03, 2019 ---0.148.018.67 ---------0.148.018.67

    6.35 , 2020 0.74 8.26 7.46 0.25 8.15 7.39 0.25 8.42 7.56 0.50 8.17 7.41 1.00 8.22 7.44 2.74 8.23 7.45

    10.70 , 2020 ---7.00 8.16 8.90 11.70 8.14 8.89 3.10 7.97 8.78 6.50 8.15 8.89 28.30 8.13 8.88

    7.75 , 2021 OSB ---------11.79 8.32 8.14 20.00 8.33 8.15 31.79 8.33 8.15

  • 7.94 , 2021 273.14 8.14 8.07 81.85 8.14 8.08 339.26 8.12 8.06 228.11 8.14 8.08 907.45 8.03 8.00 1829.81 8.08 8.04
  • 8.13 , 2021 OSB 30.35 8.31 8.25 33.62 8.34 8.28 11.70 8.32 8.26 57.23 8.33 8.27 15.75 8.33 8.27 148.65 8.33 8.27
  • 10.25 , 2021 0.06 8.19 8.76 3.00 8.39 8.89 ---0.07 8.20 8.76 0.89 8.15 8.73 4.02 8.33 8.85

    8.15 , 2022 FCI SB 84.98 8.33 8.28 79.92 8.36 8.30 71.58 8.35 8.29 54.92 8.32 8.27 124.21 8.36 8.30 415.61 8.34 8.29

    8.35 , 2022 ---0.20 8.12 8.19 0.20 8.35 8.35 ------0.40 8.24 8.27

    6.17 , 2023 7.76 8.30 7.59 9.40 8.24 7.56 7.40 8.36 7.64 1.25 8.11 7.46 13.41 8.10 7.46 39.22 8.22 7.55

    6.30 , 2023 3.00 8.16 7.54 3.00 8.42 7.73 ---0.10 8.30 7.65 1.08 8.13 7.52 7.18 8.27 7.62

    8.01 , 2023 OSB ------0.05 8.32 8.24 0.40 8.31 8.24 1.00 8.34 8.26 1.45 8.33 8.25

    10.18 , 2026 ---0.20 8.25 8.59 ------0.60 8.28 8.61 0.80 8.28 8.61

    8.24 , 2027 ---25.00 8.22 8.23 ---1.50 8.18 8.19 93.50 8.19 8.20 120.00 8.19 8.20

    6.01 , 2028 20.92 8.31 7.77 6.50 8.35 7.80 4.50 8.39 7.84 2.00 8.32 7.78 ---33.92 8.33 7.78

  • 6.13 , 2028 4.00 8.25 7.77 1.57 8.34 7.84 1.32 7.85 7.45 11.87 8.16 7.69 9.08 8.07 7.62 27.84 8.14 7.68
  • 7.95 , 2032 0.16 8.13 8.10 0.16 8.20 8.17 ---------0.32 8.17 8.14
  • 7.50 , 2034 128.53 8.31 8.21 10.10 8.37 8.27 15.40 8.25 8.16 5.00 8.24 8.15 5.15 8.14 8.06 164.18 8.30 8.20

  • 7.40 , 2035 24.13 8.35 8.24 0.41 8.31 8.21 0.22 8.24 8.15 0.22 8.28 8.18 1.00 8.25 8.15 25.98 8.34 8.24
  • 8.33 , 2036 1020.12 8.32 8.32 545.65 8.28 8.29 1317.25 8.28 8.29 224.75 8.31 8.31 859.40 8.14 8.16 3967.17 8.26 8.27 Sub-total 9992.36 8.07 7.68 8415.30 8.01 8.38 12614.40 8.04 7.99 10077.15 7.94 8.24 14162.33 7.93 8.16 55261.54 8.00 8.08 B RBI’s OMO: Sales 224.00 --562.00 --28.00 --418 --169 --1401.00 - Purchase ---------5-----5.00-Sub-total 224.00 --562.00 --28.00 --423.00 --169.00 --1406.00 -
  • (A+B) 10216.36 8.07 7.68 8977.30 8.01 8.38 12642.40 8.04 7.99 10500.15 7.94 8.24 14331.33 7.93 8.16 56667.54 8.00 8.08 3 Market Repo 24736.06 28848.02 71061.82 63611.12 52639.46 240896.48 4 State Govt Securities 511.86 8.10 8.98 261.87 8.22 10.09 366.92 8.24 8.96 378.71 8.02 9.92 234.69 8.20 9.12 1754.05 8.14 9.36

    Grand total (1 to 4) 36727.73 39461.42 85969.82 76409.13 69103.57 307671.67

    (-) means no trading. YTM = Yield to maturity in per centage per annum. CY = Current yield in per cent per annum. SGL = (RBI’s) Subsidiary General Ledger. OMO = Open Market Operations. OMC SB = Oil Marketing Companies Special Bonds. NDS = Negotiated Dealing System. OM = Order Matching segment. Notes: 1) Yields are weighted yields, weighted by the amounts of each transaction.

    2) Current yield has not been worked out for treasury bills.

    3) For Floating Rate Bonds (FRB’s) Current yields are based on the latest half-year yield determined in the auction.

    Economic and Political Weekly April 28, 2007 been adopted in a flexible manner in view of capital flows, volatility and durability of capital flows, and inflationary concerns. During the month, the RBI mopped up Rs 16,000 crore through issuance of 6.65 per cent 2009 with yields rising weekafter-week from 7.87 per cent on March 6 to 8.15 per cent on March 28.

    On March 23, the Orissa government undertook a buy-back of some of its securities; against a targeted amount of Rs 400 crore, it bought back securities worth Rs 86.412 crore at a cut-off discount of 0.2132 per cent to the reference price as against 0.37 per cent offered in February.

    Treasury Bills

    The yields on treasury bills rose throughout the month and all of them were oversubscribed despite liquidity concerns. Also, towards the end of the month, the TBs’ yield curve turned inverted with the yields on 91-day and 364-day remaining the same and that of 182-day bill overshooting them. The yield on 91-day bills ruled steady at

    7.48 per cent on auctions held on March 7 and on March 14 and thereafter it rose to 7.98 per cent on March 21 and ruled steady on March 28. The yield on 182-day bill jumped from 7.75 per cent on March 7 to 8.20 per cent on March 21. Likewise, the yield on 364-day increased from 7.83 per cent on March 14 to 7.98 per cent on March 28. Over the year, the yields have risen by 1.87 per cent, 1.59 per cent and

    1.56 per cent for 91-day, 182-day and 364day TBs, respectively (Tables 6 to 8).

    Corporate Bonds Market

    Despite the looming interest rate uncertainties in the financial year 2006-07, the mobilisations have been higher than that in 2005-06 due to increased borrowings by banks for their capital adequacy requirements ahead of the Basel-II deadline. This was despite significant increases in overseas borrowings in the form of external commercial borrowings (ECBs) and FCCBs. Moreover, in the union budget, the finance minister introduced yet another instrument, exchangeable bonds, with a view to permitting Indian companies to unlock a part of their holdings in group companies for meeting their financing requirements. Further, the limitation on bond issuances of REC and NHAI were removed for 2007-08; these were imposed for the previous year at Rs 8,000 crore and Rs 1,500 crore, respectively.

    Given the pressure on liquidity and firm interest rate outlook, the bonds market remained subdued in March, yet the mobilisations at Rs 3,135 crore were higher than those in February at Rs 2,155 crore (Table 9). Among the issuers, Small Industries Development Bank (SIDBI) mobilised Rs 1,000 crore by offering 9.60 per cent for 10 years that is, the same as that offered in January 2007.

    Sebi implemented the union budget proposal of a unified platform for trading of corporate bonds by establishing a system to capture information of corporate bonds trading at BSE from January 1, 2007. Subsequently, NSE was also allowed to set up and maintain a similar reporting platform. Between March 7 and 30, both of them reported deals worth Rs 4,632 crore.

    IV Secondary Market

    The weekly secondary market turnover gyrated throughout the month responding to the underlying liquidity situation though remaining cautious ahead of the financial year-end. Due to outflows towards dated securities and MSS auction, the turnover eased from Rs 13,460 crore in the week ending March 2 to Rs 10,758 crore in the week ending March 10, which rose to Rs 12,628 crore the next week. Following the advance tax outflow, the turnover slipped to Rs 8,267 crore in the week ended March 23 which rose to Rs 10,280 crore in the last week of the financial year.

    With the looming inflationary and liquidity concerns, the short-term yields rates rose week-by-week while the long-term yields displayed mixed trends with the same peaking in the fourth week of March due to pressure on liquidity on account of advance outflows and bankers’ strike, but these eased in the last week that led to declines in long-term yields. The spread between 12 per cent 2008 and 8.07 per cent 2017 rose from 21 basis points in the week ending March 2 to 37 basis points on March 23 but the spread narrowed sharply to 7 basis points on March 30 as the yield on former paper firmed up, while that of the latter eased. However, the spread between the above-mentioned 10-year scrip and 8.33 per cent 2036 fluctuated in a range of 23-37 basis points. Thus, the yield curve remained upward sloping at the short to middle-end of the maturities while displaying some flatness at the longer end (Graph D) (see also Appendix Table).

    RBI Reverse Repos, OMOs and MSS

    With a view to facilitate maintenance of appropriate liquidity and to respond swiftly to the evolving liquidity situation in sync with the objectives and stance of monetary policy, the RBI modified the LAF arrangements. In view of the enhanced MSS programme, the liquidity absorbed through the daily reverse repo auctions was limited; from March 5, 2007, the daily absorptions were limited to a maximum of Rs 3,000 crore each day comprising Rs 2,000 crore in the first LAF and Rs 1,000 crore in the second. As a result, the RBI accepted only reverse repo bids worth Rs 82,906 crore from Rs 3,15,005 crore being tendered during the month; the bulk of these bids, that is, Rs 3,09,455 were tendered in the first-half of the month indicating a surplus liquidity situation, while the second-half saw minuscule bids being tendered. In response to the huge liquidity constrains, the RBI injected the highest amount of Rs 2,92,465 crore in the second fortnight of the month as the huge advance tax outflows affected the market adversely (Table 10). The quantum jump in the overnight rates and the restrictions on arbitraging between the call and repo segments, caused turmoil in the market as those banks without sufficient collateral were unable to access the repo window accentuating the already precarious situation. The RBI clarified that it allowed inter-bank lending as part of normal money market functioning that enables daily liquidity management by market participants having temporary mismatches. As a result, the call rates eased significantly.

    The repo transactions outside RBI increased substantially from Rs 1,65,666 crore in February to Rs 2,40,899 crore with some of the trades being transacted at extremely high levels of 98 per cent as against the highest rate of 9.50 per cent in the previous month.

    Commercial Bonds

    Unlike the secondary market for giltedged securities, the daily average turnover for corporate bond securities increased from Rs 65 crore in February to Rs 78 crore. Among the various instruments being traded, the total trading in debentures increased from Rs 542 crore to Rs 1,266 crore.

    EPW

    [Piyusha Hukeri prepared the initial draft of this note and the required tabular data were compiled by V P Prasanth.]

    Economic and Political Weekly April 28, 2007

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