It can raise ₹13,000 crore. through bonds
Tamil Nadu has indicated that it will borrow ₹13,000 crore by issuing bonds known as State Development Loans (SDLs) in the third quarter (October-December) of FY 2021-2022. It had borrowed ₹15,000 crore in the same period last year.
For the first half (April-September) of 2021-22, the state’s borrowing through issuance of SDLs stood at ₹39,000 crore, down about 19% from ₹48,000 crore in the first half of 2020-21.
“This [the decline in borrowings] This could possibly be due to the better revenue position of the state relative to the expenditure being incurred. Also, the state may be reluctant to add to its liabilities after heavy borrowing in FY21,” said Kavita Chacko, senior economist at Care Ratings.
A senior government official said the borrowing plan was based on the availability of cash and interest cost as well. “Last year (2020-21), the interest rates for the first quarter were low. Not so this year. That’s why we are diversifying into lending this year as well.
According to data from rating firm ICRA, the weighted average interest rate on short-term SDLs stood at 5.97% in Q1, FY 2021 and 5.44% in Q2, FY 2021. It has increased to 6.43% in Q1, FY 2022 and 6.54% in Q2. , FY 2022, it said.
On October 5, the government raised ₹1,000 crore by issuing SDLs with an interest rate of 6.9% with a tenure of 10 years. The weighted average borrowing cost has increased to 6.91% from 6.85% in the last auction of SDLs.
Facing a tough financial situation with high fiscal and revenue deficit, Finance Minister Palanivel Thiaga Rajan has indicated to focus on revenue growth measures once the economy returns to normalcy from the impact of COVID-19.