State had ₹3.78 lakh crore liability from SDLs as of March
About ₹55,168 crore, or 14.6%, is coming up for repayment by 2023-24
Tamil Nadu had an outstanding liability of about ₹3.78 lakh crore as of March 2021 on funds raised through the issue of bonds called State Development Loans (SDLs). About ₹55,168 crore, or 14.6%, is coming up for repayment by 2023-24.
As per Reserve Bank of India (RBI) data, of the outstanding SDLs as of March 2021, about 22.7%, or ₹86,000 crore, is coming up for redemption in 5-7 years’ time, and about 41.1%, or ₹1.55 lakh crore, would come up for repayment in about 7 years and beyond.
About 3.6%, or ₹13,603 crore, would mature in 0-1 years’ time, while 18.1%, or ₹68,393 crore, would mature in 3-5 years’ time.
According to the RBI report ‘State Finances: A Study of Budgets of 2021-22’, SDLs accounted for 67.5% of Tamil Nadu’s total outstanding liabilities of about ₹5.59 lakh crore.
To bridge the gap between its income and expenditure or, in other words, fiscal deficit, Tamil Nadu borrows from the market through the issue of SDLs.
Kavita Chacko, senior economist, CARE Ratings, pointed out that the maturity profile of the SDLs showed that Tamil Nadu was borrowing more for a longer tenure, probably with the aim of limiting its short- to medium- term debt servicing obligations.
Tamil Nadu’s total outstanding liabilities are expected to increase to about ₹6.59 lakh crore in 2021-22, of which SDLs account for ₹4.65 lakh crore. The remaining components of the liabilities include obligations from UDAY bonds, loans from financial institutions and others.
The RBI said that across States, 64.2% of the outstanding SDLs was in the residual maturity bucket of five years and above, as of March 2021. SDL redemptions are likely to more than double from 2021-22 to 2026-27 and beyond, it noted.
As per its data, Tamil Nadu raised ₹62,425 crore in 2019-20, ₹87,977 crore in 2020-21 and ₹39,000 crore in 2021-22 (till September 2021) through market borrowings. It repaid ₹12,599 crore in 2019-20, ₹11,181.10 crore in 2020-21 and ₹4,000 crore till September in 2021-22.
The White Paper on the State’s financial position, tabled by the DMK Government, pointed out that in the last three to four years, borrowing had been restored even for non-discretionary spending like salaries, pension and interest payments, and urged that the practice be stopped.
As per RBI data, Tamil Nadu is expected to spend 20.5% of its revenue receipts on interest payments in 2021-22. According to PRS Legislative Research, a New Delhi-based think tank, States, on aggregate, are estimated to spend 12.8% of their revenue receipts on interest payments in 2021-22, and 16 States have estimated their interest payments to be higher than the recommended level of 10%.