RBI pegs state govt market borrowing for July-Sept at Rs 2.1 trillion

Actual borrowings and state-wise breakup will be intimated 2-3 days prior to auction day; RBI to try and ensure auctions are held in non-disruptive manner considering mkt conditions

Market borrowing by state governments in July-September has been pegged at Rs 2.12 trillion rupees, the Reserve Bank of India said on Friday.

“The actual amount of borrowings and the details of the States/UT (Union Territories) participating would be intimated by way of press releases 2-3 days prior to the actual auction day and would depend on the requirement of the State Governments/UTs, approval from the Government of India under Article 293(3) of the Constitution of India and the market conditions,” the RBI said.

The RBI will endeavour to ensure that the state bond auctions are conducted in a non-disruptive manner taking into account market conditions and other relevant factors, the central bank said.

The central bank will also aim for the state government borrowings to be distributed evenly throughout the quarter.

“RBI reserves the right to modify the dates and the amount of auction in consultation with State Governments/UTs,” the release read.

While state governments announced market borrowing worth Rs 1.90 trillion in April-June, the actual amount raised through bond sales was lower, likely due to states sitting on high cash balances, analysts said.

Typically, state governments increase their borrowing in the second half of the year as the Centre’s tends to borrow less during that period.

In the Budget for the current financial year, the Centre announced a record-high gross market borrowing programme of Rs 14.95 trillion. Accounting for debt switches, however, the Centre’s gross bond sales for the year are slated at Rs 14.3 trillion.