Indian states plan to borrow ₹2.87 trillion in the September quarter: RBI
As many as 26 state governments plan to borrow ₹ 2.87 trillion from the markets through securities during the September quarter, the Reserve Bank of India (RBI) said on Friday.
It is higher than the ₹ 2.6 trillion states planned to borrow during the year-ago period.
'The actual amount of borrowings and the details of the States/UTs participating would be intimated ...two/ three days prior to the actual auction day and would depend on the requirement of the state governments/UTs, approval from the Government of India under Article 293(3) of the Constitution of India and market conditions,' the RBI statement said.
'The RBI would endeavour to conduct the auctions in a nondisruptive manner, taking into account the market conditions and other relevant factors and distribute the borrowings evenly throughout the quarter,' it added.
Typically, states rely on low-cost or interest-free funds in the first half of the fiscal year, such as their tax revenues, central tax devolution, GST compensation, and interest-free loans from the Centre, before turning to market borrowings.
So their market borrowing during the second half of the year rises compared to the first half.
The combined budgets of 26 Indian states are projected to reach ₹ 70.6 trillion in 2025-26, accounting for 19.8% of their aggregate gross state domestic product (GSDP), according to a recent report by Bank of Baroda.
This marks an increase from ₹ 64.5 trillion in 2024-25, which represented a slightly higher 20.2% of GSDP.
Despite the higher overall outlay, the report released on 21 June noted that both revenue and capital expenditure are expected to moderate in 2025-26, suggesting a more restrained fiscal approach by state governments.
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