Borrowings by state governments slid three per cent during April-August of this financial year. By way of state development loans (SDLs), the states availed of Rs 1.32 trillion in this period compared with Rs 1.37 trillion in the corresponding period of FY18.
For states, the borrowing costs scaled two-year highs in the period under review though the cost dipped by 0.01 per cent in August. The weighted average of SDLs have risen by 0.57 per cent since April this year.
Data compiled by the Reserve Bank of India (RBI) showed Rajasthan topping states in borrowings as it availed of Rs 35 billion in August by way of SDLs. The cost of borrowing was the highest for Jammu & Kashmir at 8.52 per cent and the least for Odisha (8.37 per cent) in August 2018.
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Total borrowings by the central government, too, reflect a downtrend -- it was down 21 per cent in April-August. Overall borrowings fell from Rs 3.09 trillion to Rs 2.44 trillion in the period. For the month of August alone, the central government borrowings aggregated to Rs 600 billion.
Though the cost of borrowings by the central government was stable during August, it continues to be at elevated levels. A report by CARE Ratings states there has been a sustained increase in the cost of central government borrowings since August 2017. The weighted average yield of government securities auctioned in August 2018 was 0.46 per cent higher than April 2018 (7.53 per cent) and 1.24 per cent more than August 2017 (6.75 per cent).
Treasury bills auctions amounted to Rs 900 billion in August 2018. During April-August, treasury bills totalled Rs 3.57 billion, eight per cent more than the comparable period of the last financial year. In case of treasury bills, too, the cost of borrowings has escalated. The weighted average yield of auctioned treasury bills across maturities in August 2018 was 6.39 per cent, 0.15 per cent higher than in July and 0.60 per cent more since April 2018.