States continue to tap cheap rates to borrow more than originally planned

In a marked departure from the original plan, states took advantage of cheap market rates and borrowed extra. Seven state governments in line to borrow Rs 9,000 crore, ended up borrowing Rs 12,000 crore from the markets. The spread between the equivalent maturity government bonds and state development loans was 55-65 basis points (bps). This is a considerable spread contraction when compared with nearly 150-bps spread over government securities the states had to pay in the first auction of the financial year.  

On Tuesday, Andhra Pradesh, Gujarat, Kerala, Maharashtra, Rajasthan, Tamil Nadu, and West Bengal borrowed money. Except Andhra Pradesh and