States borrow ₹30,790 crore in the Nov auction; FY25 borrowings stand at 2.1 tn

Twelve states collectively raised ₹30,790 crore on Tuesday through state government securities auctions for November, reflecting a pick-up in economic activity after a sluggish start to the fiscal year, according to data released by the Reserve Bank of India (RBI).

So far in 2024-25, states have borrowed 209,961 crore.

The participating states in the latest auctions were Andhra Pradesh, Arunachal Pradesh, Bihar, Goa, Gujarat, Haryana, Karnataka, Madhya Pradesh, Rajasthan, Tamil Nadu, Uttar Pradesh, and West Bengal.

Incidentally, state borrowings through dated government securities had seen a rise following a slowdown during Q1FY25, when states raised ₹52,971 crore, with seven of them raising ₹14,700 crore in April, nine raising ₹21,200 crore in May, and nine raising ₹17,071 crore in June.

Also Read: India’s GDP growth likely slowed to a six-quarter low in Q2: Mint poll

During Q2FY25, state borrowings through dated government securities stood at ₹100,150 crore, with 10 states raising ₹29,500 in July, 14 states raising ₹36,250 crore in August, and 12 states raising ₹34,400 crore in September.

During the October auctions, 10 states raised ₹25,050 crore, according to the RBI data.

According to experts, 12 states made 10 issuances in the November auctions, with the 10-year state government yield varying from 7.14% for Andhra/Tamil Nadu to 7.18% for Bihar.

"The 10-year Gsec (government security) is at 6.85%. Hence, the SDLs (State Development Loan) went at a premium of 30bps (basis points)," said Madan Sabnavis, chief economist at Bank of Baroda.

"The strain in liquidity in the system did not have much impact on these cut-offs with the spread of 30bps being maintained," he added.

Also Read: India’s 25%-of-GDP target for manufacturing remains a steep challenge

The G-sec is a debt instrument issued by the central government.

To be sure, India's economy grew 6.7% in the April-June quarter, marking the slowest pace in five quarters, according to data released by the statistics ministry in August.

This followed a 7.8% expansion in the previous quarter.

The slowdown was largely due to lower government spending on the account of general and state elections during the quarter.

India's economic growth likely slowed to 6.5% in the September quarter, which would be its slowest pace in six quarters, according to the median estimate of 26 economists in a Mint poll.

The expectations of a slowdown are due to uneven performance across sectors, with a decline in private consumption growth offsetting the positive effects of government spending and a rural recovery.

The gross domestic product (GDP) data for Q2FY25 will be released by the central government at the end of the month.

Also Read: GDP: How consumers saved the day as government spending slowed during polls

Incidentally, the ministry of finance on Monday, in its October review, said economic momentum showed signs of revival during the month, buoyed by high-frequency indicators such as the Purchasing Managers’ Index (PMI) and e-way bill generation, which pointed to a rebound in rural and urban demand.

This recovery follows a lull marked by softening consumer sentiment and moderating urban demand, in the previous month, as highlighted in the ministry’s prior review.