Update on State 10 states raised a total of Rs.

ed a total of Rs.13,850 crores at the auction of state government securities or state development loans (SDLs) held today, which
Government was Rs.1,000 crores more than the notified amount of the auction as 2 states –Tamil Nadu and Gujarat exercised the over-allotment (green –
shoe) option and accepted Rs.500 crores each more than the auction amount.
Borrowings –
25 August’20 So far in the current fiscal year (7 April – 25 August’20), 26 states and 1 UT have cumulatively raised Rs.2.70 lakhs crores via market borrowings,
which is a 53% increase from the borrowings in the corresponding period of 2019-20 (Rs. 1.76 lakh crores from 9 April- 27 Aug’19). As per the
Contact: proposed market borrowings calendar, the state government borrowings in H1 2020-21 at Rs. 3.45 lakh crores is likely to be 53% more than that
Madan Sabnavis in H1 2019-20.
Chief Economist
madan.sabnavis@careratings.com
Table 1: Auction of State Development Loans of State Governments: 25 August’20
91-22-68374 433
Notified Amount (Rs Amount Cut Off Yield
State Tenure (Yrs)
Crs) Raised (Rs Crs) (%)
Author
Andhra Pradesh 250 250 6.77 20
Kavita Chacko
Bihar 2000 2000 5.1 3
Senior Economist
Goa 100 100 6.68 10
kavita.chacko@careratings.com
Gujarat 1500 2000 6.65 10
91-22-68374 426 1000 1000 6.63 10
Karnataka
1000 1000 6.77 13
500 500 5.05 3
Kerala
500 500 6.04 5
500 500 5.89 5
Rajasthan
500 500 6.64 10
1000 1250 5.09 3
Tamil Nadu
1000 1250 6.66 10
Uttar Pradesh 1000 1000 6.67 10
West Bengal 2000 2000 6.68 10
Source : RBI

State-wise market borrowings so far in 2020-21

The lockdown of the past 5 months has resulted in the state government witnessing a sharp fall in their revenues while at the time registering
an increase in their expenditure towards health and relief measures. This has led state government to increasing meet their funding shortfalls
through market borrowings via issue of SDLs. Of the 26 states that have issued SDLs so far in the financial year, 11 states have seen their market
borrowings increase by 50% and above when compared with the corresponding period of year ago. At the same time, the borrowings of 8
states has been lower than year ago. These states are Uttar Pradesh, Punjab, Manipur, Uttrakhand, Assam, Meghlaya, Arunachal Pradesh and
Himachal Pradesh. Jharkhand and Tripura have not raised funds via market borrowings so far in 2020-21.
Tamil Nadu, Maharashtra, Andhra Pradesh, Rajasthan, Karnataka, Telangana, West Bengal, Gujarat, Haryana and Kerala are amongst the largest
borrowers so far in 2020-21 and these 9 states have together accounted for 83% of total state government borrowings. There has been a
marked increase in the borrowings of Karnataka (375%), Maharashtra (176%) and Tamil Nadu (128%) in the current fiscal year from that in the
first 5 months of 2019-20.
Table 2: State-wise market borrowings
FY 20 (9 April- 27 Aug FY 21 (7 April- 18 Aug '20)
% change
'19) Rs crs Rs crs
Andhra Pradesh 16,078 24,250 51
Arunachal Pradesh 472 428 -9
Assam 1700 1,000 -41
Bihar 7,600 8,000 5
Chhattisgarh 1,000 1,300 30
Goa 900 1,100 22
Gujarat 13,300 14,280 7
Haryana 8,501 14,000 65
Himachal Pradesh 1,600 500 -69
Jammu & Kashmir 2,749 3,300 20
Jharkhand 1,500 NA
Karnataka 4,000 19,000 375
Kerala 11,682 13,930 19
Madhya Pradesh 6,000 9,000 50
Maharashtra 12,500 34,500 176
Manipur 803 700 -13
Meghalaya 350 200 -43
Mizoram 258 310 20
Nagaland 100 350 250
Odisha 2,000 3,000 50
Punjab 10,820 7,700 -29
Rajasthan 15,882 23,950 51
Sikkim 213 467 119
Tamil Nadu 19,615 44,750 128
Telangana 12,800 18,461 44
Tripura 450 NA
Uttar Pradesh 11,000 7,500 -32
Uttarakhand 1,300 1,000 -23
West Bengal 11,510 17,500 52
Source: RBI and CARE Ratings

Tenure and Interest Rate of State Government Dated Securities

 The borrowings of state’s is mainly through the issues of securities carrying a tenure of 10 years. 37% of the SDL’s issuances in the first 5
months of 2020-21 have a tenure of 10 years.
 The 3 year tenure SDLs have the second highest share of issuances (11% of total) followed by the 30 year SDLs (8%).
  The weighted average interest rate of state government dated securities (across states and tenures) auctioned on 25 August’20 at 6.19%
was 13 bps lower than week ago (18 August’20).
 The (weighted average) yields of the 10 year and 3 year SDLs in today’s auction hardened by 16 bps each from week ago. The 10 year
SDL yields have risen by 24 bps to 6.66% during August’20 and that of 3 years have increased by 35 bps to 5.09% in this month.

Chart 1: Market Borrowings and Yield

Chart 2 : Yield Movement of 10 year SDLs

9
35,000 7.74 9 7.90

Weighted Average Yield (%)

Weighted Average Yield: %

6.82 6.51 8 8
30,000 6.79 6.60
5.90
6.12 6.43
6.33 6.197 7 6.44 6.50 6.66
25,000 5.97 5.85 6 6

Rs. Crs
20,000 5
4 5
15,000
3 4
10,000
2 3
5,000 1
2
0 0
1
07-Apr-20

21-Apr-20

05-May-20

19-May-20

02-Jun-20

16-Jun-20

30-Jun-20

11-Aug-20

25-Aug-20
14-Jul-20

28-Jul-20
0

02-Jun-20

16-Jun-20

30-Jun-20
07-Apr-20

21-Apr-20

05-May-20

19-May-20

11-Aug-20

25-Aug-20
14-Jul-20

28-Jul-20
Amount Raised : Rs Crs Weighted Average Yield

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