The Gross Market Borrowings of Telangana are estimated to be 2.7% of GSDP while the Net Market Borrowings of the state are at 2.1% of GSDP.
A study by Motilal Oswal Financial Services Limited, the fiscal deficit is at 3.7% of GSDP and outstanding debt constitutes 23.8% of GSDP.
At least 21 of the 27 states have more outstanding debt to GSDP ratio than Telangana. Telangana’s outstanding debt at 23.8% of GSDP is among the lowest with the highest being 53% for Arunachal Pradesh followed by 49% for J&K and Punjab.
Of the 27 states, 18 have more gross market borrowings than Telangana with the highest being Punjab at 6.5% of GSDP, Bihar 5.2%, Nagaland 4.8%, West Bengal 4.6%, Rajasthan 4.5% and Andhra Pradesh 4.3%.
According to an analysis of the 2023-24 budgets of 27 states and Union Territories (UTs) by Motilal Oswal Financial Services Ltd. (MOFSL) the gross market borrowings (GMBs) of all states are budgeted at INR 9.9t (3.3% of GDP) and net market borrowings (NMBs) are budgeted at INR 7.3t (2.4% of GDP) in FY24E.
According to the RBI’s data, actual state GMBs/NMBs stood at INR 7.6 t/INR 5.4t (or 2.8%/2.0% of GDP) last year.
The outstanding debts of states are budgeted to grow 11.5% YoY, taking it to 28.3% of the GDP in FY24E, slightly higher than the 28.0% of GDP in FY23RE.
States’ debt was at a 15-year high of 31% of GDP in FY21, up from 25% of GDP in the pre-Covid years. Indian states have budgeted a fiscal deficit of 3.1% of GDP in FY24E v/s 3.4% of GDP in FY23RE and 2.7% of GDP in FY22.
The aggregate receipts of all states are budgeted to grow 10.9% YoY in FY24E, following 20%/25.4% growth in FY23RE/FY22.
Interestingly, the entire growth is likely to be led by states’ own receipts, as the Centre’s support is expected to be stagnant in FY24.
Total receipts, thus, are budgeted to stay unchanged at an all-time high of 14.4% of GDP in FY24E. Total spending of states is budgeted to grow 9.0% YoY in FY24E, following 24.1%/14.3% growth in FY23RE/ FY22.
Combining the 2023-24 budgets of the Centre and MOFSL’s estimates of state governments suggests that the total receipts of the general government (GG; Center + States) are budgeted to rise 12.8% YoY in FY23RE and 14.2% YoY in FY24BE.
Aggregate spending, however, is budgeted to increase 10% YoY in FY24BE, following a growth of 15.3% in FY23RE.
Accordingly, the combined fiscal deficit is budgeted to decline to 9.0% of GDP in FY24BE, from 9.8% of GDP in FY23RE (and 9.4% of GDP in FY22).
