Spike in state borrowings spooks bond market; Rs 961 cr devolved

Jun 28 2014, 08:28 IST
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In this fiscal, the states have already borrowed Rs 50,526 cr from the markets, a 56 pct jump over the same period of last year. In this fiscal, the states have already borrowed Rs 50,526 cr from the markets, a 56 pct jump over the same period of last year.
SummaryRBI has announced that state govts will borrow up to Rs 55,000 cr for quarter July-September quarter.

had followed.

The financial problems for the states have compounded as tax devolution from the Centre declined in FY14 as the growth rates for the economy sputtered. So the states have to borrow more. While the states raised only Rs 32,026 crore in the first quarter of FY14, the sum had ballooned to Rs 60,000 crore by the last quarter to reach Rs 1,96,000 crore for the year.

Saugata Bhattacharya, senior vice president, Axis Bank said he would expect the states to borrow about Rs 2,10,000 crore for FY 15.

But if the GDP growth rate for the year remains sluggish this could be breached handsomely.

MONEY FROM MARKET

* In this fiscal, the states have already borrowed Rs 50,526 crore from the markets, a 56 per cent jump over the same period of last year

* The ministry of consumer affairs and public distribution has issued a warning to states earlier this month that they will have to foot the bill for paying more than MSP for wheat and paddy

* The financial problems for the states have compounded as tax devolution from the Centre declined in FY14 as the growth rates for the economy sputtered

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