The Tamil Nadu government plans to raise ₹25,000 crore from market borrowings in the second quarter (July-September) of fiscal 2024, as per the indicative calendar released by the Reserve Bank of India (RBI).
States, including Tamil Nadu, borrow from the market through the auction of bonds known as State Development Loans (SDL).
As per the budget for 2023-24, the State government plans to borrow a total amount of ₹1,43,197.93 crore in 2023-24 and make repayments of ₹51,331.79 crore. The net borrowings are projected at ₹91,866.14 crore, including ₹82,625.96 crore of net open market borrowings and ₹9,240.18 crore from other sources.
Borrowing ceiling
The Centre has fixed a borrowing ceiling for the States. States can borrow up to 3% of their Gross State Domestic Product (GSDP) for 2023-24. An additional borrowing of 0.5% of GSDP is allowed for fulfilment of power sector reforms.
In the Budget Estimates for 2023-24,Tamil Nadu’s fiscal deficit is estimated at 3.25% of the GSDP. The fiscal deficit is the difference between total receipts and total expenditure.
Since fiscal 2018, about 50% of the State’s market borrowings went towards financing revenue expenditure. Revenue expenditure includes expenditure on salaries to government employees, pensions and other retirement benefits, operations and maintenance expenditure, interest on outstanding loans and subsidies and grants, scholarships and contributions, including the devolution to local bodies. In 2022-23, about 38% of market borrowings went towards revenue expenditure.
Tamil Nadu ended fiscal 2022-23 with gross market borrowings of ₹87,000 crore and was the top borrowing State. However, most borrowings were channelised towards capital assets.
