New jobs scheme may push yields higher

₹30,000-40,000 crore, said Paras Jasrai, associate director and economist at India Ratings and Research.

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In 2024-25, states borrowed ₹10.73 trillion.

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This comes when state finances are already strained by populist schemes, weak nominal gross domestic product (GDP) growth and subdued tax buoyancy. Additionally, market demand has remained subdued among long-term investors and banks.

“In the upcoming budget, state borrowings are going to go up while the Centre may still manage it. I have heard numbers as high as a 20% increase in state borrowing. Now, with the change in the MGNREGA, it will have a state liability also. So, now if state borrowings go up, you will see a further yield pressure coming in,” a senior private bank treasury official said, requesting anonymity.

In 2024-25, states borrowed ₹10.73 trillion, 7% higher than 2023-24.