Data on gross market borrowings of states during April-July 2024 shows that Andhra Pradesh with ₹37,000 crore of borrowings between April and July 2024 is the top borrower, followed by Tamil Nadu in second spot with ₹33,000 crore. While AP grew its borrowing by 25 per cent YoY, TN reduced it by 18 per cent.
Rajasthan (₹25,500 crore), Punjab (₹21,693 crore) and Telangana (₹21,000 crore) are the other three states that make up the top five borrowers in April-July 2024. In the tenth spot is Jammu and Kashmir, whose borrowing grew almost three-fold in the four months at ₹7,800 crore, likely in preparation for its polls as expenses outpaced revenue.
West Bengal grew its borrowings the most with a 92 per cent YoY rise during the 4-month period at ₹12,500 crore. On the other hand, Maharashtra went slow on borrowings at just around ₹16,000 crore in the four months of FY25 -- almost half of what it did in the same period last fiscal.
These relate to state borrowings from the market through State Development Loans (SDLs) and these market borrowings typically account for around 75 per cent of their total borrowing. The remaining is funded from loans from the Centre.
Comparing SDLs borrowed by states in FY25 with their total budgeted borrowings shows that Andhra Pradesh and Telangana have already borrowed more than one-third of their total budgeted borrowing as of July 2024 at 46 per cent and 34 per cent respectively. TN, which has been the top borrower among states for at least three fiscal years, seems to have gone slow on borrowings in FY25, borrowing just 23 per cent of budgeted levels, compared to 30 per cent in the same period last year.
However, the indicative calendar of states’ market borrowings for October-December 2024 suggests that Tamil Nadu will borrow ₹29,000 crore, while Andhra Pradesh wants to borrow ₹12,000 crore in Q3 FY25 and Telangana plans to raise ₹7,400 crore.
Paras Jasrai, Senior Economic Analyst, India Ratings and Research, said borrowings by Andhra Pradesh and Telangana are likely to be higher because growth in revenue receipts is slowing in this fiscal. “Capex spending has been on the lower side for TN, along with pick-up in revenue growth in the state, leading to lower borrowings,” he adds.
AP’s revenue receipts during April-August 2024 were around ₹56,000 crore, compared to ₹70,000 crore in the same period last fiscal, as per CAG data.
“On aggregate, states have been borrowing lower than their indicative calendar for 14 of the last 15 quarters, but the trend was more pronounced in Q1FY25, where state borrowings were 43% lower than indicated,” Harshal Patel, research associate at Emkay Global Financial Services, said. This will likely pick up as pent-up spending rises towards the end of FY25, he added.