Kerala prunes Q2 borrowing 60 pc to Rs5000 cr ($670mn)

 TN to borrow Rs22,000 cr; Maharashtra going for Rs21,000 cr

THIRUVANANTHAPURAM: Kerala is gearing down the market borrowing during the second quarter (July-September) of the current fiscal after having raised Rs12,430 crore ($1.66 billion) during the just concluded quarter.

As per the initial borrowing plans for the states prepared by RBI, Kerala will be borrowing only Rs5000 crore ($670 million) during the entire second quarter of the fiscal (Q2) – down by 60 per cent compared with the previous quarter.
This will leave a borrowing headroom of Rs Rs27,570 crore for the state in the third and fourth quarters against the state’s total borrowing mandate of about Rs45,000 crore as per the enhanced borrowing limit.

The first yield-based auction for the Q2 market borrowing will commence from July 7 and will be taken through another 12 weekly auctions until September end.

In fact, there has been a drastic change in the thinking of the government with regard to the market borrowing right after the April 7 auction, the first one in the current fiscal. As per the earlier plan, the finance Minister Dr Thomas Isaac had announced that the state would front-load this year’s market borrowing – and seek to borrow half of the borrowing earmarked for the whole year during the first month itself.

Seemingly annoyed by the high price, as high as 8.96 per cent, the  state had to pay for its 15-year Rs2000 crore bond or the state development loan (SDL), Dr Isaac had applied bakes on the borrowing plan and decided to downsize the Q1 borrowing to Rs12,430 crore.

Kerala will be participating at only three auctions during the whole 3-month period from July to September, though 13 auctions will be conducted by RBI during the second quarter.

The states will be raising a total of Rs1,78,267 crore, with Tamil Nadu slated to be the biggest borrower this time at Rs22,000 crore followed by Maharashtra at Rs21,000 crore, Karnataka (Rs15,000 crore), Andhra Pradesh (14,000 crore) and Uttar Pradesh planning to borrow Rs13,000 crore.

Kerala had started cutting 20 per cent from the salary of government employees for five months starting from April until August. This helps the state to raise Rs400 crore monthly, and this could be one reason why the state has decided to soft-pedal its borrowing plan during the quarter.








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