States’ market borrowings set to soar 22% to Rs 4.5 tln in FY18

Mumbai: Even as the Centre has contained its fiscal deficit at 3.2 per cent for FY-18, the states are looking the other way and their gross market borrowings next financial year are estimated to jump by nearly 22 per cent to Rs 4.5 trillion, says a report by rating agency Icra. The massive rise in market borrowings by the states is due to their higher fiscal deficits, higher repayment burden, exclusion from the national small savings fund, higher salary outgo arising from the seventh pay commission awards and the note ban impact on their revenues. "Gross market borrowings by the states are likely to rise from Rs 3.7 trillion in fiscal 2017 to Rs 4.5 trillion in fiscal 2018, which would exert an upward pressure on yields of state development loans (SDL) in fiscal 2018," warns Jayanta Roy, group head for corporate sector ratings.