July 5, 2021 1:23:14 am
The combined borrowing indicated by three states — Maharashtra, Tamil Nadu (TN) and West Bengal (WB) — accounts for a third of the total issuance of Rs 1,69,600 crore expected in the second quarter of fiscal 2022.
According to the Reserve Bank of India, Maharashtra has indicated that it will borrow Rs 25,000 crore in this quarter, the highest among the 26 states and Union Territory, followed by West Bengal (Rs 18,000 crore) and TN (Rs 15,500 crore).
Given UP’s modest issuance of Rs 5,000 crore in Q1 of FY2022 and nil indicated issuance in Q2 of FY2022, the state could be repeating the strategy of a highly back-ended borrowing in FY2021 (82 per cent of the total issuance in H2 FY2021) in the ongoing fiscal, according to Icra.
The indicative calendar of market borrowings for Q2 FY2022 released by the RBI on July 1, 2021, has pegged the market borrowing of 26 state governments and one Union Territory at Rs 1,69,600 crore, 9 per cent lower than total State Development Loan (SDL) issuance of Rs 1,86,300 crore in Q2 of last year.
The weighted average cut-off of the gross SDLs issued in the first quarter of FY2022 stood at 6.88 per cent, a substantial 30 bps higher than Q1 FY21 level.
In the first quarter, the gross SDL issuance stood at Rs 1,44,600 crore, 19 per cent lower than the initially indicated Rs 1,78,300
crore, despite the widening state-level restrictions amidst the second wave.
The state governments’ cash flow situation in Q1 FY2022 was bolstered by three major factors, namely the receipt of additional tax devolution of Rs 45,000 crore from the government (GoI) in late-March 2021 (in excess of the Rs 5,50,000 crore tax devolution that has been included in the revised estimates (RE) for FY2021), record-high GST inflows of Rs 140,000 crore in April 2021 that pertained to activity in the previous month — before the second wave ratcheted up — and receipt of substantial transfers related to 15th Finance Commission’s recommendations by some states (Rs 43,600 crore in April-May 2021).
The gross SDL raised in April was lower than indicated (Rs 9,200 crore against Rs 48,700 crore), following which the gap narrowed in May (Rs 50,600 crore against Rs 58,700 crore). The situation reversed in June, with the issuance being 19.6 per cent higher than the indicated amount (Rs 84,900 crore against Rs 71,000 crore).
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