The new normal for state borrowings

Have the states shown a lack of prudence in their borrowing programme to tide over the pandemic?

Normally, the Union and state governments tend to reveal a skewed pattern in their market borrowing. While the Centre’s borrowing is typically front-loaded during the first half of the financial year, for the states, market borrowings tend to be much more during the second half. This year is, however, an exception.

Twenty seven states have already borrowed almost Rs 1 trillion during March 17 to June 30. Interestingly, this is close to the shortfall in goods and services tax (GST) collections of the country in the months of April and May 2020. Since the promulgation of GST, state revenue depends