KOCHI: Although, the reimposition of lockdown across states since the start of FY22 has resulted in the loss of economic output and thereby income for the government, the borrowings by the majority of the state governments, including Kerala, thus far have been lower than that in the comparable period of FY21 which was also a period of lockdown and restrictions, says a report from CARE Ratings.
“When compared with a year ago (April-July), 14 states have either borrowed less or not borrowed at all. In case of Kerala, it is 33% lower and for Tamil Nadu it is 21% less than year ago. Borrowings by Gujarat has been 19% less than last year and that of Punjab and Maharashtra has each been 14% lower. Karnataka has not raised funds from the market thus far in FY22. This is a notable change from a year ago when the states had raised Rs 12,000 crore during the comparable period,” the report said.
Kerala had borrowed Rs 13,430 crore during the period April 7-July 21, 2020, in comparison with Rs 9,000 crore borrowed during April 9-July 19, 2021, a decline of 33%. Among the major states, the year-on-year borrowings have been higher for Uttar Pradesh (by 67%), West Bengal (17%), Telangana(14%) and Rajasthan (6%). Tamil Nadu, Maharashtra, Rajasthan, Andhra Pradesh and Telangana have been the top five borrowing states so far in FY22, accounting for around 60% of the total borrowings.
On Monday, six states raised a total of Rs 8,700 crore at the auction of the state government securities or state development loans (SDLs). Haryana did not accept any amount of Rs 1,000 crore notified amount of the auction. The other states accepted the notified amount of the auction.
The borrowing cost for the state governments at Monday’s auction declined marginally when compared with a week ago. It nevertheless was sustained at elevated levels. The weighted average cost of borrowing for the state governments through the auction of dated securities; across states and tenures was 6.96%, 3bps lower than that at the auctions held a week ago. This declined could be attributed to the easing of the global crude oil prices following the major oil producers agreeing over the weekend to boost oil output, the report said.
