Market Borrowings of State Governments: Who Borrowed the Most

By Rusen Kumar

The fiscal landscape of India’s states is shaped significantly by how they raise and manage debt. Market borrowings have emerged as a vital financial instrument for state governments to fund large-scale infrastructure, social welfare programs, and to meet fiscal deficits. Over the two fiscal years 2022–23 and 2023–24, data on Gross and Net Market Borrowings presents a revealing snapshot of how Indian states are leveraging debt to meet their growing expenditure needs.

According to recent RBI data, states collectively raised Rs. 7.58 lakh crore in gross borrowings in 2022–23, which jumped to Rs.10.07 lakh crore in 2023–24—a significant increase of 32.78%. Similarly, net borrowings—which reflect actual addition to state debt after repaying past loans—rose from Rs.5.18 lakh crore to Rs.7.17 lakh crore, registering a 38.22% growth. These figures highlight an increased reliance on debt financing across the country, with some states showing steep hikes and others demonstrating caution or even reductions.

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States with Significant Increases in Borrowings

A closer look at individual states reveals a varied picture, with some states dramatically increasing their borrowings while others saw decreases or remained relatively stable. States like Chhattisgarh, Karnataka, Uttarakhand, Goa, and Uttar Pradesh recorded triple-digit percentage increases, signaling a shift in fiscal posture or growing capital needs:

Chhattisgarh saw a staggering 1500% increase in Gross Borrowings, jumping from Rs.2000 Crore to Rs.32000 Crore. This is accompanied by a dramatic shift in its Net Borrowing, from a negative Rs.2287 Crore in 2022-23 to a significantly positive Rs.26213 Crore in 2023-24. This massive swing highlights a fundamental change in Chhattisgarh’s borrowing activity.

Karnataka more than doubled its Gross Borrowings, increasing by 125% from Rs.36000 Crore to Rs.81000 Crore. Its Net Borrowing also saw a remarkable surge of 142.32%.

Uttarakhand nearly doubled its Gross Borrowings, with a 96.88% increase from Rs.3200 Crore to Rs.6300 Crore. Its Net Borrowing saw an even larger jump of 162.07%.

The Union Territory of Jammu & Kashmir also showed a very high percentage increase, with Gross Borrowings rising by 92.81% and Net Borrowings by 132.92%. Notably, the source clarifies that the State of J&K ceased to exist constitutionally from October 31, 2019, and its liabilities continue as those of the new UT.

Goa experienced significant percentage growth, with Gross Borrowings up by 88.89% and Net Borrowings soaring by 212%.

Uttar Pradesh recorded a substantial increase in both Gross (75.59%) and Net (104.19%) Borrowings, reaching Rs.97650 Crore Gross and Rs.85335 Crore Net in 2023-24, making it one of the largest absolute borrowers.

Borrowing Trends in Large States

Other large states also saw considerable absolute increases in Gross Borrowings, including Maharashtra (from Rs.72000 Cr to Rs.110000 Cr, up 52.78%), Tamil Nadu (from Rs.87000 Cr to Rs.113001 Cr, up 29.89%), and Rajasthan (from Rs.46057 Cr to Rs.73624 Cr, up 59.85%). These states represent a large portion of the total market borrowing volume.

States with Decreased or Negative Borrowings

States like Jharkhand, Himachal Pradesh, and Gujarat either curtailed borrowings or focused on debt reduction, possibly indicating tighter fiscal control or alternate revenue sources. In contrast, some states reduced their market borrowing activity or saw decreases. Jharkhand drastically cut its Gross Borrowings from Rs.4000 Crore to Rs.1000 Crore (-75.00%), and its Net Borrowing became more negative (from -Rs.155 Cr to -Rs.2505 Cr). Himachal Pradesh also saw significant reductions in both Gross (-42.34%) and Net (-50.95%) Borrowings. Gujarat reduced its Gross Borrowings by -29.07% and Net Borrowings by -57.80%. Other states like Meghalaya, Mizoram, and Punjab also saw decreases in Net Borrowings.

States with Zero Gross Borrowings

Interestingly, Odisha and Tripura consistently recorded zero Gross Borrowings in both 2022-23 and 2023-24. Both states also showed negative Net Borrowings in both years, meaning their repayments exceeded any market borrowings —suggesting a strong focus on debt reduction or reliance on non-market funds such as central transfers, grants, or internal revenues. Odisha’s net negative borrowing was -Rs.7500 Crore in 2022-23 and -Rs.4658 Crore in 2023-24, while Tripura’s was -Rs.645 Crore and -Rs.550 Crore respectively. This suggests a reliance on other funding sources or effective debt management strategies that allowed them to repay more than they borrowed from the market during these years. Jharkhand, as noted earlier, also had negative net borrowing in both periods.

Early Data for 2024-25

The data for the initial months of 2024-25 (January, February, March) included in the source indicates ongoing borrowing activity. A Grand Total Gross of Rs.460,163 Crore and Net of Rs.343,853 Crore was raised across states during January-March 2024.

Understanding Gross vs. Net Borrowing

The distinction between Gross and Net borrowing is crucial. Gross Amount Raised represents the total funds borrowed during the period, while Net Amount Raised is the Gross amount minus repayments of principal during the same period. A positive net borrowing indicates that new borrowings exceeded repayments, adding to the state’s outstanding debt. A negative net borrowing means repayments were greater than new borrowings, effectively reducing the outstanding debt (at least from market sources).

(India CSR)