States Step Up Borrowings in July as Capex Drive Gains Pace

₹96,769 cr allotments made through state development loans, well above ₹68,383 cr a year ago

- Rhik Kundu

State governments sharply ramped up their borrowings in July, with ₹96,769 crore allotments made through state development loans (SDLs), as they sought to fast-track capital spending and inject momentum into economic growth.

This was well above the ₹68,383 crore allotted a year ago, data from the Reserve Bank of India (RBI) showed.

The data showed that state borrowings, in terms of allotments through SDL, climbed steadily through the first four months of FY26, from ₹52,870 crore in April to ₹64,722 crore in May and ₹82,207 crore in June, before peaking in July.

The borrowing surge breaks from the usual pattern, where states typically backload SDL issuances in H2 of the fiscal year. Typically, states tap low-cost or interest-free funds in the first half of the fiscal, including tax revenues, central tax devolution, GST compensation, and interest-free loans from the Centre, before turning to costlier market borrowings.