The Tamil Nadu government ended fiscal 2022 with a net borrowing of ₹72,500 crore, compared with ₹76,796 crore in 2021, according to the data from the Reserve Bank of India.
Out of it, the State raised a net amount of ₹4,500 crore in February 2022 and ₹23,300 crore in March.
Tamil Nadu did not raise any amount in April 2022, the first month of fiscal 2022-23, amid changes in the Centre's guidelines for granting permission to the States to borrow. It started borrowing from May 2022 after permission was granted.
According to the budget documents, Tamil Nadu plans to borrow a net amount of ₹90,116.52 crore during 2022-23. This sum excludes ₹6,500 crore anticipated from the Centre towards the back-to-back loan for the GST compensation shortfall.
As per the information released by the RBI, Tamil Nadu indicated that it would borrow ₹23,500 crore in the first quarter (April-June) of fiscal 2022-23. States, including Tamil Nadu, borrow from the market through auction of bonds known as the State Development Loans.
So far, the State has borrowed ₹6,000 crore this fiscal. It plans to raise ₹2,000 crore through issue of a 30-year bond at an auction to be conducted by the RBI on Tuesday.
The Centre has allowed the States to borrow 3.5% of their Gross State Domestic Product (GSDP) in 2022-23. An additional borrowing of 0.5% is allowed on fulfilment of power sector reforms and based on their contributions to the National Pension System for government employees.
As per the norms, the States have to disclose the off-budget borrowings since 2020-21 and the over-utilisation against the borrowing limits. The State Public Sector Companies and Special Purpose Vehicles, among others, resort to off-budget borrowings in which the principal and/or interest are to be serviced out of the State budgets. The Centre will adjust such borrowings from this year’s ceiling.
While the State finances have been helped by higher tax devolution estimated by the Centre, there is uncertainty over the extension of the GST compensation period which ends on June 30. States, including Tamil Nadu, have sought an extension. Tamil Nadu has estimated a revenue loss of ₹20,000 crore if the period is not extended.
