Karnataka projected to borrow ₹48,000 crore in January-March quarter

Karnataka is projected to make borrowings of ₹4,000 crore each in every week in the fourth quarter of the financial year 2024-2025.

According to the Reserve Bank of India’s indicative borrowing calendar for the quarter, Karnataka has projected a market borrowing of ₹48,000 crore in the 12 weeks of the January-March quarter.

The weekly schedule of auctions to be held during the January-March quarter along with Karnataka and other States/UTs, who have confirmed participation and indicated tentative amounts, has been drawn up.

The RBI, in consultation with the State governments/UTs, announced that the quantum of total market borrowings by various State governments/UTs for the quarter January-March 2025 is expected to be ₹4,73,477.00 crore.

The RBI, in its release, said it would conduct the auctions in a non-disruptive manner, taking into account the market conditions and other relevant factors and distribute the borrowings evenly throughout the quarter. The RBI has reserved the right to modify the dates and the amount of auction in consultation with the State government, the release said.

Market borrowing are raised by the State governments from the public and managed by the RBI through issue of marketable securities. In the State Budget for 2024-2025, Chief Minister Siddaramaiah, who also holds the finance portfolio, estimated that the government would borrow ₹1,05,246 crore. The Chief Minister is expected to present his 15th Budget in March.

Karnataka’s borrowings increased in recent years owing to implementation of social welfare schemes, particularly the five guarantees by the Congress government. The State’s borrowings stood at ₹44,549 crore in 2022-2023 and increased to ₹85,818 crore in 2023-2024.

According to estimates, the government is expected to spend nearly ₹60,000 crore on executing the guarantee schemes. According to Basavaraj Rayareddy, Congress MLA and economic adviser to the Chief Minister, the State government is expected to borrow ₹85,000 crore in the current fiscal year (2024-25). Nearly 50% of the borrowings would be repaid in the form of interest and principal amount for loans borrowed in the past, he says.

Karnataka, like other States, in recent years has been increasingly relying on the open market for its borrowings. The State’s outstanding liabilities include public debt, public account liabilities, and off-Budget borrowings have increased during the last three years.

According to PRS Legislative Research, at the end of 2024-25, the State’s outstanding liabilities are estimated to be 24% of Gross State Domestic Product (GSDP), higher than the revised estimate for 2023-24 (23% of GSDP).