Six states raise ₹11,500 crore in SDL auction
Premium- As Assam, Chhattisgarh, Himachal Pradesh, Jharkhand, Madhya Pradesh, Odisha, and Tripura were to cumulatively raise Rs10,800 crore but have not yet tapped the market for funds
MUMBAI: Six states raised Rs11,500 crore at the auction of the state government securities or state development loans (SDLs) held on Tuesday, showed data from the Reserve Bank of India (RBI) compiled by Care Ratings.
“Fewer number of states have been seen to be tapping the markets for funds so far in the current financial year as compared with that in the corresponding period of FY21," the report pointed out.
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According to Care Ratings, 17 states and one union territory (UT) have raised Rs90,750 crore so far in FY22 as opposed to 22 states and one UT which raised Rs1.42 trillion in the year-ago period. As per the tentative borrowing calendar, twenty-six states and one UT were to raise Rs1.39 trillion during 8 April to 8 June 2021. However, only 65% of this amount has been raised thus far.
Assam, Chhattisgarh, Himachal Pradesh, Jharkhand, Madhya Pradesh, Odisha, and Tripura were to cumulatively raise Rs10,800 crore but have not yet tapped the market for funds, it added.
“The lower quantum and fewer number of state undertaking market borrowing so far in the current financial year could largely be ascribed to the lower expenditure undertaken by the states relative to their revenues," the report said, adding that some states could also be availing the financial accommodation being provided by the RB in short-term borrowings through special drawing facility, and ways and means advances, instead of long-term borrowing through the issue of SDLs.
“The borrowing via special drawing facility, and the ways and means advances being linked to the repo rate comes at a lower cost than the funds raised through the SDL issue. The WMA of the states as of 28 May at Rs.6,473 crore was significantly higher than the ₹3,372 crore availed by the states in the beginning of April," it added.
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