State to raise funds by issue of 25-yr securities
By CL Jose
THIRUVANANTHAPURAM/September 29-2022: Hardly a week since the state has borrowed Rs1436 crore on September 27 by selling 18-year securities or SDLs, Kerala has been allowed to borrow another Rs1000 crore on October 3.
“Consent of Central Government has been obtained to the floatation of this loan as required by Article 293(3) of the Constitution of India,” a Kerala state Finance Ministry statement said.
This time, the state is raising funds by issuing 25-year state development loans (SDLs)s, ostensibly to push the redemption of these securities farther as part of its debt management. Though 10 states are expected to raise Rs19,500 crore in total from the market, issuing SDLs on October 3, Kerala is issuing the longest tenured securities.
With the October-3 SDL issue, the state will have borrowed a total of Rs9936 crore as part of the market borrowing programme, which forms the largest borrowing exercise of the state; but still far short of the total borrowing made by the state during the same period last year.
Though the total borrowings and other liabilities are projected to be Rs44,993.56 crore for the whole year, Kerala’s borrowings and other liabilities stood at only Rs14,023.93 crore as of August end – five months into the financial year, according to a CAG report on state’s finances.
Kerala has been required by the Centre to go slow on borrowing, thanks to the off-balance borrowings made by the state in the past two years through the other government entities, primarily Kerala Infrastructure Investment Board (KIIFB) and Kerala State Social Pension Ltd (KSSPL).
At the same time, the Reserve Bank of India (RBI) has also sent out instructions to public sector banks cautioning against lending to public sector entities in the state without revenue models. Fortunately, the GST collection in the state as well as the share from the Centre have been better than expected in the past few months.
