Uncertainty prevails over the quantum of open market borrowings the State can raise during the current financial year.
The Central government has no doubt given ‘ad hoc’ approval for raising OMBs to the tune of ₹4,000 crore in the auction of securities to be conducted by the Reserve Bank of India (RBI) on Tuesday. Officials remained tight-lipped when asked whether the permission given by the Union Finance Ministry related to the present quarter, half year or for the full fiscal.
“Ad hoc is temporarily given before the permission for the whole year is granted,” was how a senior official responded. He was confident that the State will get the permission sooner than later to raise a major chunk of the OMBs if not the entire amount it had projected in the budget estimates. The State had projected borrowings and other liabilities to be of the order of ₹52,167 crore during the current fiscal.
Given the objections raised by the Union Finance Ministry over the quantum of borrowings raised in the name of corporations and questions on their ability to repay the loans, the State is unlikely to qualify for raising the full quantum it had projected in the budget estimates. The government is hopeful that it will be in a position to raise OMBs to meet the immediate financial requirements in the due course.
Officials are confident that the government could raise the resources required as the limit fixed by the Central government allowing States to borrow 3.5% of their GSDP is continuing during the current fiscal. “It will revert to 3 % of GSDP next financial year,” a senior Finance department official said on the condition of anonymity.
The official told The Hindu that borrowings of the State were not linked with the power sector reforms which the State had refused to comply with and this would enable the State to raise OMBs in the coming days.
