Govt. to borrow ₹1,000 cr. more to meet immediate commitments

The State government decided to raise another tranche of open market borrowings (OMB) on Wednesday to meet its immediate financial commitments including the payments still due under the Rythu Bandhu scheme.

The government will raise ₹1,000 crore state development loan through auction of securities by the Reserve Bank of India. This will take the entire open market borrowings during the first quarter of the current financial year to ₹13,500 crore, probably the highest quantum of OMB during a single quarter in recent years.

This is ₹ 1,000 crore higher than ₹ 12,500 crore raised during the first quarter of the previous financial year when revenue fell steeply following the lockdown imposed due to COVID-19 pandemic and the restrictions that followed. The government has raised ₹12,500 crore loans from open market so far this year and this includes ₹7,500 crore obtained in four tranches during June alone.

The amount being mobilized by the government is much higher than the quantum it had projected to the RBI ahead of the start of the fiscal year. The government has indicated that it is willing to mobilise loans of ₹8,000 crore during the first quarter of the current year. But, Wednesday’s OMB of ₹1,000 crore will take the total quantum raised during the quarter to ₹13,500 crore.

According to senior officials, the government had to opt for fresh OMBs because of the low revenues as well as increased commitments on account of the spree of welfare programmes, including Rythu Bandhu, the farmer-centric scheme entailing an expenditure of over ₹7,500 crore for each of the two instalments operational in the State.

Coupled with this was the impending implementation of the revised pay scales which would involve an additional outgo close to ₹1,000 crore a month on the State exchequer. The government had obtained time for payment of arrears of revised pay scales in cash due from April announcing that they would be paid in due course. But it is reported to be contemplating to pay cash arrears of about ₹1,000 crore to different categories of employees for June before the end of July second week.