Maharashtra’s borrowing indicated at Rs27,000 crore during Q3
By CL Jose
THIRUVANANTHAPURAM/October 02-2022: Kerala’s third quarter (Oct-Dec) market borrowing has also been pegged at Rs9000 crore by RBI matching the first two quarters in the current financial year (FY23).
Does this quarterly indicative borrowing calendar prepared for the states/UTs serve any purpose or just serve the purpose of a ritual?
Though an analysis is not available on other states, Kerala’s market borrowing has been totally inconsistent with the indicative borrowing calendar rolled out by RBI each quarter, with regard to timing as well as amount.
At least, that has been the case with Kerala in both quarters – first and the second.
Kerala government’s total market borrowing for the third quarter has been estimated to be Rs9000 crore, according to the notification released by Reserve Bank of India (RBI).
As per the borrowing plan released by RBI, Kerala is expected to borrow Rs2,500 crore during the month of October in two tranches, Rs5,500 crore in November in four tranches and Rs1000 crore in December through a single tranche.
The largest borrower among the states/UTs during the quarter will be Maharashtra with an estimated borrowing budget of Rs27,000 crore.
The aggregate borrowing by all states and union territories (UTs) put together during the quarter would be a Rs2,53,060 crore.
Based on the empirical facts, there has always been huge variance between the amount indicated by the borrowing calendar released by RBI and the real borrowing made by Kerala during the past two quarters.
Against the indicative total borrowing of Rs18,000 crore, Rs9000 crore in each quarter, for the first two quarters, Kerala had ended up borrowing only little less than Rs10,000 crore, though the reasons are obvious and may have been discussed several times at different forums.
It will be interesting to watch whether the indicative borrowing has any bearing on the real borrowing during the third quarter as well.
Object of loan
Though these borrowings are part of the aggregate debt and liabilities being raised to fund the fiscal deficit as part of the state budget, each time the state borrows, it’s required to furnish the object of such borrowing.
The most intriguing aspect of the notification issued in respect of such borrowing is how the Finance Department explains the ‘object’ of such borrowings.
Even if the fund thus borrowed is used to pay salary or to meet any other exigencies as is the case mostly, the official notification states, “The proceeds of the loan will be utilized for financing productive development programmes and projects to be implemented in the State.”
