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States' combined market borrowings double to Rs 1.7 lakh crore in Q1 FY21: ICRA
Jul-06-2020

Rating agency ICRA in its latest report has said that the states' combined market borrowings as state development loans (SDL) have doubled to Rs 1.7 lakh crore during Q1 (April-June) of FY 2020-21 from Rs 0.8 lakh crore in same quarter of the previous fiscal year, on account of expenditure to fight Coronavirus disease (COVID-19) pandemic and lower tax realisation due to multiple lockdown extensions.

According to the report, the various extensions of the lockdown have widened the gap between the state governments' tax collections from various sources in Q1 FY21 and the expenditure they needed to incur related to COVID-19, as well as other spending. It pointed out that this sharp rise in borrowings reflects the ‘shock to the revenues’ of the state governments, given the decline in the consumption of several non-essential goods and services that is expected to have taken place during the lockdown period.

ICRA estimates the net SDL issuance in Q1 FY21 to have expanded by a sharp 135.6 percent to Rs 1.4 lakh crore from Rs 0.6 lakh crore in Q1 FY20. It further said while the central government had permitted the phased resumption of economic activity in the country from June 8, 2020, and some available indicators point to a gradual recovery, certain states have reinitiated limited lockdowns after a spike in new infections.

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