Unutilised Borrowings By Some States Softens Their Fiscal Constraints For FY22: ICRA

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ICRA Research Report

We estimate that 20 state governments have substantial aggregate unutilised borrowings of Rs 2.6 trillion for FY2021, that have been carried forward to FY2022.

For the current fiscal, out of the normal net borrowing ceiling of 4.0% of gross state domestic product set by the Government of India for the 28 state governments (Rs 8.5 trillion), 3.5% of the GSDP may be considered unconditional, whereas the balance 0.5% of the GSDP (Rs 1.1 trillion) is effectively conditional on its usage towards incremental capital expenditure in FY2022.

The size of the unutilised borrowing of FY2021 as a proportion of the FY2022 GSDP exceeds 0.5% of GSDP for 15 states, reducing their likely dependence on the conditional borrowing of 0.5% of GSDP.

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