States' Q4 borrowing to rise 18% after Q2 growth slump

Capex boost likely as West Bengal, Maharashtra, Karnataka lead ₹4.73 tn borrowing plan

- Rhik Kundu

State governments appear to be priming themselves for a significant capital expenditure (capex) push in the current quarter, offering hope of a drive towards reviving the pace of India's economic growth after a succession of slow-growing quarters.

States, led by West Bengal, Maharashtra and Karnataka, are set to raise their market borrowings by about 18% year-on-year in the fourth quarter of 2024-25 (Q4 FY25).

According to latest data released by the Reserve Bank of India (RBI), total market borrowing by states in Q4 FY25 may reach ₹4.73 trillion, up from gross issuances of ₹4 trillion a year ago.

West Bengal has indicated it will borrow ₹58,000 crore, the highest, followed by Maharashtra (₹50,000 crore) and Karnataka (₹48,000 crore).

These states, along with Uttar Pradesh, Tamil Nadu, and Rajasthan, account for a significant share of the total market borrowings projected for the quarter.

The rise in state borrowings offers hope of a broader economic recovery, following a notable slowdown in gross domestic product growth in the past couple of quarters.

At 5.4%, GDP growth in Q2 FY25 marked its slowest pace in nearly two years. Growth in Q1 FY25 stood at 6.7%. In comparison, FY24 saw real GDP growth at 8.2%.