In the third quarter of 2021–22, the Karnataka Government raised ₹16,000 crore State Development Loans (SDLs) through market borrowings to meet its development and non-developmental expenditure.
The Government raised these loans through RBI between October 5 and December 14. The rate of interest ranges from 4.73% to 6.89%, depending on the duration of loans from two years to 11 years. Besides Karnataka, many States raised loans in different phases for management of expenditure, the RBI said.
The Government raised these loans owing to the revenue shortfall during the first and second quarters, largely owing to the lockdown and restricted economic activities.
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The State Government’s borrowings crossed ₹96,000 crore in 2020–21 largely because of increased expenditure on health infrastructure for management of the pandemic. The State Government has proposed to borrow over ₹70,000 crore (4% of the GSDP) during the current financial year (2021-22).
The State’s revenue collections through GST, sales tax, and excise showed improvement since October 2021, owing to opening up of the economy as COVID-19 cases declined.