So far in the financial year 2020-21 (April 7-October 6), 28 states and two union territories (UTs) have cumulatively raised a total of Rs 3.75 lakh crore through market borrowings. This is 55 per cent more than a borrowing of Rs 2.43 lakh crore in the corresponding period last year. As per the borrowing calendar for the first three quarters of 2020-21, states are to borrow Rs 5.07 lakh crore, of which nearly 75 per cent has already been raised, said a CARE Ratings report.
The nationwide lockdown led to a sharp decline in the revenues of the state governments coupled with higher expenditure requirements to mitigate the impact of the pandemic which has severely pressured their finances. To meet their funding requirements, states have been increasingly resorting to market borrowings. There has been a significant increase in the market borrowings for the majority of the states so far in the current fiscal compared with the year ago period, the report added.
A majority of states have seen a notable increase in their borrowings - ranging between 21 per cent and 343 per cent - from a year ago period. These exclude states such as Arunachal Pradesh, Bihar, Jharkhand, Himachal Pradesh, Punjab, Manipur, Uttar Pradesh and Tripura whose borrowings have actually fallen during this period. Maharashtra, Tamil Nadu, Andhra Pradesh, Karnataka and Rajasthan have been the top five states, accounting for 52 per cent of the total borrowings by state governments so far in FY21. Moreover, four states, namely Karnataka, Maharashtra, Tamil Nadu and Nagaland have seen their market borrowings increase by over 100 per cent while eight states (Madhya Pradesh, Meghalaya, Haryana, Assam, Uttrakhand, Andhra Pradesh, Odisha and Chhattisgarh) have seen a rise of 50-100 per cent. Further, states such as Sikkim, Telangana, Jammu & Kashmir, Kerala, Rajasthan, Haryana, Gujarat, West Bengal and Mizoram have seen a growth of 23-36 per cent in their borrowings, highlighted the report.
A total of 17 states raised Rs 22,350 crore at the auction of state government securities or state development loans (SDLs) held on Tuesday, which was Rs 1,200 crore more than the notified amount of the auction. This was primarily due to two states, Maharashtra and Jharkhand that accepted an additional amount of Rs 1,000 crore and Rs 200 crore, respectively.