The Reserve Bank of India has reiterated its caution to States like Telangana to reduce their borrowings.
The RBI is learnt to have sounded the caution during the meeting of the State Finance secretaries held in Mumbai on Thursday. The need for the States to adopt prudent borrowing strategy and efficient cash management practices in view of the evolving macro economic scenarios were discussed during the day-long meeting.
The meeting follows the first national conference of chief secretaries chaired by Prime Minister Narendra Modi at Dharamshala last week to prepare a common development agenda for higher economic growth. “There is nothing specific. But the RBI cautioned that borrowings should be reduced,” a senior official said.
The caution assumes significance in the light of the restrictions imposed by the Union Finance Ministry on the borrowings quantum for the current year. The Union Ministry has reportedly reduced the borrowings limit by ₹19,000 crore, but the officials said no figure has been committed to the State so far. “It’s a guesstimate,” the official told The Hindu.
Finance department officials appeared hopeful that the State would get the consent for raising borrowings to the projected levels in the due course. “Wait and see,” an official said when asked about the issue. The RBI is understood to have quoted the Telangana example when it came to longer-term bonds as the option had reduced the rollover risk.
The States are understood to have requested the Apex Bank to conduct capacity building programmes and the latter gave its consent to it.
