State governments have raised Rs 50,521 crore (Rs 505.21 billion) under the market borrowing programme in 2003-04, with Kerala leading the chart even as the recourse to ways and means advances and overdrafts was lower, reflecting improved management of cash flows.
The gross and net market borrowings allocated to states for the fiscal 2003-04 amounted to Rs 50,805 crore (Rs 508.05 billion) and Rs 46,659 crore (Rs 466.59 billion), respectively, the Reserve Bank of India said in its report on state finances in FY-04 released on Monday.
This was inclusive of the additional allocation of Rs 29,000 crore (Rs 290 billion) towards the debt swap scheme and Rs 26,623 crore (Rs 266.23 billion) was used for repayment raised under the scheme.
Declining trend in interest rates also percolated into lower cut-off yields on market borrowings of states through auction as states resorted to borrowings at market rates. The range of cut-off yield declined from 11.57-11.8 per cent during FY-01 to 5.78-6.03 per cent in FY-04.
RBI said the debt-gross domestic product ratio of states was estimated to increase further from 27.9 per cent to 28.8 per cent by end of March 2004.
For majority of states, the average rate of growth of debt from FY-02 to FY-04 was between 10 and 20 per cent.
Market borrowings of all states through auction as a percentage of gross market borrowings declined from around 15 per cent in FY-02 to around 6 per cent in FY-04.
During FY-04, Kerala raised the highest share of its market borrowings through auction (23 per cent) followed by Andhra Pradesh and Maharashtra (15 per cent and 11 per cent, respectively).
The RBI said market borrowings of states through tap tranche as a percentage of gross market borrowings increased from 85 per cent in FY-02 through 90 per cent in FY-03 and 94 per cent in 2003-04.
In 2001-02, the number of states using auction for market borrowings increased to 12, which subsequently came down to 10 and 8 during 2002-03 and 2003-04, respectively.
Some of the states -- Andhra Pradesh, Gujarat, Kerala, Madhya Pradesh, Maharashtra, Tamil Nadu and West Bengal have been resorting to auctions regularly, it said.
During 1999-2000, Punjab was the only state to raise loan from market through the auction route, but in next fiscal as many as six states opted for auctions.
On WMA and OD, RBI said the outstanding WMA and OD of state governments at Rs 4,578 crore (Rs 45.78 billion) as on March 26, 2004, was lower by 16.1 per cent than the level of Rs 5,459 crore (Rs 54.59 billion) on March 28, 2003.
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