State Government Borrowings: Care Ratings

Care Ratings Report

States and UTs have been resorting to higher market borrowings to meet the shortfalls in their finances consequent to the sharp fall in their revenues due to the lockdown led disruptions in economic activity along with the increase in expenditure that is being incurred by them for controlling and mitigating the impact of the pandemic.

• Eight states raised a total of Rs.12,206 crore at the auction of the state government securities or state development loans (SDLs) held today.
• This was Rs. 250 crore higher than the notified amount of the auction. The additional amount was accepted by Telangana.

• So far in the current fiscal year (Apr. 7 2020 - Jan. 19 2021), 28 states and 2 UTs (Union Territories) have cumulatively raised a total of Rs.5.83 lakh crore via market borrowings, 34% more than the borrowings in the corresponding period of 2019-20 (Rs. 4.34 lakh crore). The states have so far raised 71% of the scheduled market borrowings as per the indicative calendar for 2020-21.
• The weighted average cost of borrowing for the state government dated securities auctioned today; across states and tenures, at 6.48% was 7 bps higher than a week ago (6.41% on 12 Jan’21).

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