Mint Primer: Why states in the South are in a rush to borrow
Mint explains: Yes. Andhra Pradesh, Telangana, Tamil Nadu, and Kerala have borrowed much higher than what they had planned to during the second quarter of 2023-24. Karnataka is the only exception—the state, during this period, did not raise money at all, even though it had planned to borrow ₹19,000 crore.
Andhra Pradesh borrowed ₹8,500 more than its target, while Telangana, Tamil Nadu, and Kerala exceeded their plans by ₹6,300 crore, ₹5,000 crore and ₹3,300 crore, respectively. Tamil Nadu, with ₹54,000 crore, and Andhra Pradesh which borrowed ₹43,500 crore, raised the most from the market. Many states have borrowed less, and this has helped the overall borrowing of ₹2.1 trillion to remain below the planned ₹2.4 trillion.
Uttar Pradesh borrowed ₹21,000 crore less than what it had planned. Other states that raised significantly lower funds were: Gujarat (lower by ₹15,000 crore), West Bengal ( ₹11,000 crore), Maharashtra ( ₹6,000 crore) and Madhya Pradesh ( ₹4,000 crore). Better than expected revenue flow—own revenue plus devolution from the Centre—is a possible reason.
Also, capex-related borrowing could be lower as the Centre is offering 50-year interest-free loans for it. For increased capex. Andhra Pradesh spent ₹15,884 crore on capex in the first five months of 2023-24, more than double the amount spent in the same period last year.
Telangana spent ₹18,400 crore this year on capex between April-August, nearly 3X the year-ago amount. Higher borrowing went towards funding capex, improving the quality of expenditure. The story is different here.
Tamil Nadu’s revenue in April-August rose by 6% but revenue expenditure grew faster, by 14%. Higher borrowings funded this gap. Not just that, the state has cut back on capex by
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