Borrowing cost of states at the highest level in 23 weeks, Rs 3.8 lakh crore raised from debt market in the current financial year

The first weekly loan auction of the third quarter has seen a big increase in the borrowing cost of the states. It has increased by 10 basis points to a 23-week high of 7.56 percent.

In the first weekly debt auction of the third quarter of the calendar year, Rs 22,500 crore has been raised by 14 states by issuing state government securities.

Aditi Nair, chief economist at ICRA Ratings, said the first weekly debt auction of the third quarter saw a sharp rise in cut-offs across all tenors. Due to this, the weighted average cost has reached a 23-week high of 7.56 percent. Last week it was at 7.46 percent.

He further said that the cost of borrowing has increased at such times. The weightage average period has come down from 17 years to 13 years. The spread in the 10-year State Bond and new 10-year Government Security (7.18 GS 2033) has been taxed at 33 basis points. It was earlier at 32 basis points.

If this latest auction is included, then in this financial year the states have raised Rs 3,80,500 lakh crore from the debt market. This is 28.6 percent more than the same period last year. On a weekly basis, 15.4 percent more borrowing has been done as compared to last year.