The State government’s interest payments and debt servicing during the current financial year is pegged at ₹17,594.38 crore.
This is almost ₹3,000 crore higher than ₹14,625.36 crore according to the revised estimates of the previous financial year. Of the total debt servicing this year, interest on internal debt alone is ₹16,502.1 crore, over ₹2,500 crore higher than ₹13,898 crore of the previous financial year.
According to the handbook on State Budgets “State Finances: A study of Budgets 2021-22” released by the Reserve Bank of India, a major component of debt servicing is ₹14,635.34 crore interest on open market loans borrowed by the State government. Interest on loans from the Central government for the current year is pegged at ₹281.82 crore, close to ₹100 crore higher than ₹188.05 crore of the previous fiscal.
Interest on National Social Security Fund (NSSF) and that on small savings, State provident funds and other instruments is pegged at ₹787.77 crore and ₹800.45 crore respectively.
The State government had been opting for open market borrowings since the onset of Coronavirus (COVID-19) pandemic to fulfil the immediate financial requirements as well as to implement spree of welfare schemes like Rythu Bandhu.
Fiscal borrowings
Borrowings during the current fiscal are inching towards ₹30,000 crore mark reaching ₹25,573 crore by the end of the first half of the current financial year between April and September. The State had raised another ₹3,500 crore during the third quarter of the fiscal so far as against the total borrowings of ₹6,295 crore during the quarter (October – December) projected in the tentative calendar of borrowings released by the RBI.
Keeping in view the impact of COVID-19 pandemic on the finances, the government had estimated borrowings and liabilities could be of the order of ₹45,509 crore for the current fiscal year and the same was placed in the budget under capital receipts.
Sources, however, said there would not be any major cash outflow on account of debt servicing as a major chunk of the interests would be offset through book adjustments.
