State Turns to Market Borrowings to Replace Costly Loans with Cheaper Alternatives

Speedy Summary

• The state government is relying on open market borrowings to refinance high-interest loans with lower-interest ones and offset the interest burden.
• Market borrowings totaled ₹6,000 crore on September 2, surpassing the proposed ₹12,000 crore for Q2 in its indicative calendar.
• Borrowing breakdown:

– ₹2,000 crore (August 26)
– ₹1,000 crore (August 12)
– ₹5,000 crore (August 5)
– ₹3,500 crore (July 29)

• Total raised so far: Over ₹17,000 crore during Q2.
• Deviations are evident from the borrowing calendar projections; additional auctions by RBI remain in the quarter.
• Repayment challenges: Outstanding guarantees stand at approximately ₹6,592 crore this fiscal and will increase to over ₹18,000 crore next fiscal as per RBI data.
• Current State liabilities include outstanding Government Securities worth ₹16,740 crore (₹15,848 crore market borrowings +₹892 UDAY loans),of which only₹10 ,148 Crores repaid till now This debt-expiration linked restructuring needs further absorption

Official Clarification stated Govt opts further room incase requirements