Market borrowing fails to follow RBI calendar
CL Jose
THIRUVANANTHAPURAM: Kerala is embarking on its market borrowing exercise for the current financial year 2024-25 (FY25) with a Rs1000 crore borrowing taking place on April 23.
It may be remembered that the Kerala-Centre standoff continues on the contentious issue of state’s net borrowing ceiling (NBC), and a case filed with the Supreme Court on this has already been referred to the SC’s Constitution Bench.
RBI calendar
Quite interestingly, as per the states’ market borrowing calendar released by the Reserve Bank of India (RBI), Kerala would have commenced this financial year’s borrowing with a borrowing of Rs1500 crore on April 8 followed by another one to the tune of Rs2000 crore on April 16 followed by yet another on April 23 for Rs500 crore.
In total, Kerala would end up borrowing Rs9000 crore during the first quarter until June 30, according to the RBI release. However, assessing the current trend, the borrowing is unlikely to follow the RBI calendar.
Fy25 borrowing
Though the state has indicated in its budget for 2024-25 that it plans to borrow Rs44,528.96 crore in total, it would be interesting to observe how things are going to turn around especially in the wake of an ongoing case in Supreme Court on the same issue and more so due to the overshooting of borrowing that has taken place during the year went by (2023-24).
FY24 borrowing
Though the borrowing plan for the previous financial year (FY24) was pegged at Rs42,202.58 crore (CAG report for April 23) at the start of the financial year, as things stand today, the total borrowing has been revised upwards to Rs51,856.38 crore (CAG Feb report).
As of February end, Kerala had borrowed Rs30,849.57 crore in total including its market borrowing. As per the RBI statistics, Kerala has made market borrowings to the tune of Rs13,608 crore during March alone, taking the total for the financial year 2023-24 (FY24) to Rs44,457.57 crore.
Two key developments will have major impact on Kerala’s borrowing plans going forward. One obviously is the Supreme Court Constitution Bench’s stand on the states’ right to borrow.
The other key aspect is how the additional borrowing Kerala has made during 2023-24 is going to figure on the borrowing limit for the current financial year (FY25).
The lone factor that has been central to the years-long dispute on borrowing limit is the off-balance sheet borrowing the state has carried out through the two entities – KIIFB and KSSPL by guaranteeing their borrowings.
Referring to the multifaceted issue of the state’s borrowing limit, which now involves the Supreme Court too apart from Centre and the state, the Finance Minister KN Balagopal has made several critical remarks.
“Everything now depends on the Supreme Court verdict. The Union Government has denied us many things; our rights as a state are denied, and finance is crucial for development. Rightful, eligible finances are being denied,” Balagopal said.
