Rs 13,000 Crore Likely From Relief Bonds

The Centre is likely to mop up about Rs 13,000 crore through Relief Bonds in the current financial year. The net receipt target from the bonds is Rs 6,500 crore for 2002-03.

According to finance ministry officials, the receipts from Relief Bonds was to the tune of Rs 10,000 crore in 2001-02.

The interest rate on the bonds was pared to 8 per cent in the current financial year from 8.5 per cent a year earlier in keeping with the reduction of interest rates on small saving instruments.

In Budget 2002-03, Finance Minister Yashwant Sinha had capped investment in the 8 per cent Relief Bonds at Rs 200,000 per individual.

Subsequently, however, the Centre removed the ceiling for both retired government employees and private sector employees.

It also launched a 7 per cent Relief Bond, which was open to all individuals and Hindu undivided families.

Officials said while the realisation from the 7 per cent bonds was about Rs 2,000 crore till date, that from 8 per cent bonds was almost Rs 7,500-8,000 crore. Receipts from Relief Bonds are part of the capital receipts of the government.

For individuals with a high net worth, Relief Bonds offer an attractive investment avenue since the interest is tax free.

In the case of the 8 per cent bonds, the post-tax returns work out to almost 12 per cent, while in the case of the 7 per cent bonds, it is about 11 per cent.

Relief Bonds have a five-year tenure and the interest is payable half-yearly. The receipts from the bonds are partly used by the government to fund its fiscal deficit.

The Budget estimate for 2001-02 assumed sale of the bonds, net of repayments, at Rs 3,000 crore. The revised estimates were, however, kept at Rs 4,500 crore.