Tamil Nadu continues to be the heaviest borrower among all States, having scooped ₹46,000 crore under the ‘state development loan’ programme, between April 7 and September 8. In the auctions of State government securities that were held today, 13 States raised a total of ₹15,675 crore, which was ₹1,500 crore more than the notified amount of the auction as two States, Haryana and Maharashtra exercised their greenshoe option and took more, according to a report of the ratings agency, CARE.
So far in the current fiscal year (April 7–September 8), 26 States and 2 UTs have cumulatively raised ₹2.97-lakh-crore via market borrowings — 51 per cent increase from the borrowings in the corresponding period of 2019-20 (₹1.97-lakh-crore from April 9- September 9).
While Tamil Nadu did not participate in the auctions of today, it remains the top borrower, its take having more than doubled from ₹21,190 crore in the corresponding period of last year—when again, it was on the top of the list.
Maharashtra and Karnataka grew more in percentage terms — 475 per cent and 200 per cent, respectively— compared with last year.
CARE notes that the cost of borrowings for State government has risen to a 4-month high. The weighted average yield of State government dated securities (across States and tenures) auctioned today at 6.57 per cent was 8 bps higher than a week ago, it said.
Tamil Nadu began this year with a record fiscal deficit of ₹59,346 crore, even while managing to keep its nose above water by limiting its fiscal deficit to 2.84 per cent of the State GDP, against the mandatory ceiling of 3 per cent.
In his Budget speech in February, Tamil Nadu’s Finance Minister said the State would wind up the year with a net outstanding debt of ₹4.56-lakh-crore and a debt-to-GDP ratio of 21.83 per cent, well below the 25 per cent norm.