Odisha raises Rs 500 cr more from open market

The amount raised would be used to finance capital projects

The state government has raised an additional Rs 500 crore from the open market via sale of government securities.

The sale of government stock was done through an auction conducted by the Reserve Bank of India (RBI) recently. So far, the state government has raised Rs 4,000 crore from the open market.

The amount so raised would be used to finance capital projects. The state government had not resorted to market borrowing since 2006-07. But, resource crunch and an increased need to step up capital outlay had prompted the state government to take the Centre’s nod to raise funds from the open market.

The overall borrowing target has been pegged at Rs 12,800 crore for this financial year (FY16). The state’s loan burden is expected to touch Rs 56,000 crore by the end of FY16. Still, it would be a comfortable 17 per cent of gross state domestic product (GSDP) and in consonance with the state Fiscal Responsibility and Budget Management (FRBM) Act, 2005, which mandates debt stock within 25 per cent of the GSDP.

The government stock, up to 10 per cent of the notified amount of the sale, would be alloted to eligible individuals and institutions, subject to a maximum limit of one per cent of the notified amount for a single bid according to the revised scheme for non-competitive bidding facility in the auctions of state government securities of the general notification.

The investment in government stock will be reckoned as an eligible investment in gov securities by banks for the purpose of Statutory Liquidity Ratio (SLR) under Section 24 of the Banking Regulation Act, 1949.