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State govt borrowing turns expensive after RBI's repo rate hike

Much less raised than the indicated Rs 16,800 crore

Mumbai: A security personal outside Reserve Bank of India (RBI) headquarters, in Mumbai, Wednesday, June 8, 2022. (PTI Photo
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Reserve Bank of India.

Abhijit Lele Mumbai
The yields on state development bonds at Tuesday’s auction -- the first after the Reserve Bank of India’s half a percentage point increase in the repo rate to 4.90 per cent -- hardened further by five-six basis points across maturities.

However, the extent of the increase in yields at the auction was low compared to the nine basis point rise in the cut-off yields at an auction held last week. Three states raised Rs 5,000 crore — Andhra Pradesh (Rs 2,000 crore), Haryana (Rs 2,000 crore), and Tamil Nadu (Rs 1,000 crore) —through such bonds. This amount (Rs 5,000 crore) raised