The arduous wait of the State Government for raising funds through open market borrowings has ended with the Union Finance Ministry reportedly granting permission to the State.
The State Government has immediately opted for raising ₹4,000 crore by way of selling stocks in the auction of securities to be conducted by the Reserve Bank of India on June 7. The new State Government stocks will bear interest at the rates determined by RBI at the auctions. The stocks will be governed by the provisions of the Government Securities Act, 2006, and the Government Securities Regulations, 2007.
Though permission had been accorded to raise OMBs, sources said the quantum of borrowings projected in the budget are unlikely to be raised. The Finance Ministry has reportedly slashed the entitlement of the State by close to 20 per cent citing the off-budget borrowings on which the Union Government had expressed concerns.
This is the first time that the State Government is opting for OMBs this financial year as the provision was kept on hold following queries on the borrowings and management of finances by the State Government. Finance special chief secretary K. Ramakrishna Rao camped in New Delhi for a few days to convince the Union Government of the prudent fiscal management practices put in place in the State and the manner in which the government was repaying its loans/interest without any default.
The Government had planned to raise ₹52,167 crore through borrowings during the current fiscal as shown by the Comptroller and Auditor General of India in the monthly key indicators. Accordingly, it was proposed to raise ₹15,000 crore in the first quarter of which ₹11,000 crore was planned in the first two months. The State however could not borrow any amounts so far following the queries raised by the Union Government.
The issue had become a cause of concern for the State Government which is hard pressed for resources to meet its immediate financial commitments including the payments under Dalit Bandhu and the impending Rythu Bandhu entailing an expenditure of ₹7,400 crore at the beginning of the kharif season later this month.
