On July 09, 2020, According to data from the Reserve Bank of India (RBI), Tamil Nadu (TN) has topped market borrowings among States in India with a collection of Rs.30,500 crore in the fiscal 2020-21(FY 21).
- TN, which has accounted for 17% of the borrowings done through the issue of bonds (known as state development loans), has been followed by Maharashtra ₹25,500 crore (14%), Andhra Pradesh ₹17,000 crore (9%), Rajasthan ₹17,000 crore (9%).
TN’s borrowing:
Earlier on July 7, 2020, Tamil Nadu raised ₹1,250 crore at the low interest rate of 6.63% for the 35-year bonds and ₹1,250 crore at the rate of 4.54% for the three-year bonds in the auction conducted by RBI.
- In addition, it has also raised an additional amount of ₹500 crore in place of originally planned ₹2,000 crore through the issue of 35 years and 3 years bond with ₹1,000 each .It also have a ‘green shoe’ option to raise a further ₹250 crore in each of these securities.
What is the need?
The state Government has raised the amount through the issue of long tenure bonds rather than short-terms funding tools like Ways and Means Advances (WMA) to meet the increased expenditure and falling revenue situation amid the coronavirus (COVID-19) pandemic.
The Finance Secretary projected that the TN will witness a shortfall in revenue of about ₹12,000-₹13,000 crore a month.
The GST (Goods and Services Tax) collection of TN has sharply reduced by 15% in June 2020, higher than the 3% fall in national GST collections due to the continuous lockdown.
About Reserve Bank of India (RBI):
Headquarters– Mumbai, Maharashtra
Governor– Shaktikanta Das
Deputy Governors– 4 (Bibhu Prasad Kanungo, Mahesh Kumar Jain, Michael Debabrata Patra, one is yet to be appointed).
