India to become 50% non-cash economy in
consumption in 3 years: Report
Market borrowings by
India's state governments are likely to be lower than the amounts indicated in
their budgets, as off-balance sheet liabilities will continue to be adjusted in
this fiscal year, two sources familiar with the matter said.
Since last fiscal year
the federal government has been adjusting for liabilities that are not directly
on the balance sheets of states but would eventually have to be serviced by the
The off-balance sheet borrowings
incurred after fiscal year 2021 will continue to be adjusted over the next
three financial years, said one of the sources. However, from here on, any new
off-balance sheet borrowings will be adjusted in the same year or the year
after they have been incurred, the source added.
The sources spoke on
condition of anonymity since they are not allowed to speak to the media.
In one year, the
adjustment from borrowing requirements will not be more that 0.25% of gross
state domestic product, said a the second source.
Not all states will be
Pradesh, Uttar Pradesh and Kerala are among the list of states with high
off-balance sheet borrowings for whom the adjustments will be spread across two
to three years, said the second source.
In May 2022, rating
agency CRISIL estimated that states' off-balance sheet borrowings hit a decadal
high of close to 7.9 trillion rupees ($97 billion) in 2021-2022 or 4.5% of
gross state domestic product.
Meanwhile, another 185 billion
rupees of such liabilities were accumulated in the last fiscal year ended
March, government data disclosed in parliament, showed.
Lower market borrowing by
state governments was one factor that helped keep federal government bond
yields in check in 2022-2023.
State governments are
likely to borrow a gross of 9.5 trillion rupees and a net of 6.7 trillion
rupees this fiscal year, according to estimates from rating agency ICRA.
In the last fiscal year,
states borrowed a gross of 7.6 trillion rupees, which was 2.3 trillion lower
than the amount indicated in the quarterly borrowing calendars issued by
Other factors that helped
bring down borrowings included a strong rise in tax collections and the
availability of capex-loans from the federal government. State governments also
had high cash balances at the start of the previous year, which helped bring
down borrowings, said ICRA. ($1 = 81.7030 Indian rupees).