Fifteen states raised a total of ₹ 17,783 crore in the auction of state government securities or state development loan (SDL) on Tuesday. While Gujarat accepted an additional ₹ 500 crore on the notified amount of the auction, Punjab did not accept any amount.
“So far, in the current financial year [7 April’20 – 23 March’21], 28 states and 2 union territories have raised ings 7.78 lakh crores in total through market borrowing, 28% more than lending in the same period 2019-20 [₹6.07 lakh crore], “Care Ratings said in a report.
The states collectively have so far utilized 94% of the fixed market debt of ₹ 8.24 lakh crore as per the indicative calendar for 2020-21. In 2019-20, the states raised 5 6.35 lakh crores in total.
According to the report, the cost of borrowing by states has come down drastically. Tuesday’s auction saw a steep decline in borrowing costs for state governments and fell to the lowest level since the end of August ’20.
“Weighted average cost of borrowing for state governments through auction of dated securities; In states and jurisdictions, 6.21% was 78bps lower than a week earlier [6.99% on 16 March’21], “It said.
The 10-year securities yields (average yield across states) also fell to a two-month low of 6.84% and were down 31 bps compared to a week earlier (7.15% on 16 March’21).
The spread between 10 bds and GSEC’s 62 bps was lower than 30 bps compared to a week earlier.
CARE Ratings stated that states and union territories had resorted to higher market borrowings as a result of a decline in their revenue as a result of a decline in their financial losses, disruptions due to a lockdown in economic activity, as well as spending for control and mitigation With the increase. Impact of epidemics.
It states that most of the states have seen a significant increase in their market debt in the current financial year as compared to a year ago.
For example, there has been a significant increase in market lending for large states like Madhya Pradesh (118%), Rajasthan (53%), Karnataka (50%), Maharashtra (42%), Tamil Nadu (42%), Kerala (41% ), Telangana (27%), Andhra Pradesh (22%) and Uttar Pradesh (14%).
Five states that have borrowed less than the first year. These include Arunachal Pradesh (by 65%), Odisha (by 60%), Tripura (by 35%), Manipur (26%), and Himachal Pradesh (by 3%). Together these states have borrowed about 1.6% of the total state government so far in 2020-21.
The report noted that Tamil Nadu, Uttar Pradesh, Karnataka, Maharashtra, Rajasthan, West Bengal and Andhra Pradesh were the top seven borrowing states, accounting for 60% of total borrowings in 2020-21.
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