Covid-19 impact: State govts likely to raise more money using bonds

According to the Reserve Bank of India (RBI) data, state governments' gross market borrowings stood at Rs 6.08 trillion in 2019-20, up from Rs 4.78 trillion in 2018-19.

With the central government jacking up the size of its market borrowings for FY21, state governments, too, are expected to raise more money, via development bonds. This is to fund expenditure as revenues dry up because of the severe economic downturn triggered by the nationwide lockdown to contain the spread of Covid-19.
 

Madan Sabnavis, chief economist, CARE Ratings, said revenues will be under severe pressure in FY21, yet states will have to pay salaries, pensions, service old debts, and spend on establishments. Some money like GST arrears will come from the Centre. Against this backdrop, the borrowings by state governments