TS market borrowings to hit at 2.7% of GSDP in FY24

The fiscal deficits of Telangana and AP are likely to be at 3.7 per cent and 3.8 per cent of their respective GSDP while their outstanding debts may stand at 23.8 per cent and 33.3 per cent of respective GSDP in FY24E

Hyderabad: The gross market borrowings (GMBs) of Telangana and Andhra Pradesh are budgeted at 2.7 per cent and 4.3 per cent of their respective gross state domestic product (GSDP) in FY 2023-24, says a report. According to a study by Motilal Oswal Financial Services Limited (MOFSL), the net market borrowings (NMBs) for Telangana and AP are estimated at 2.1 per cent and 3.4 per cent of the respective GSDP.

The fiscal deficits of Telangana and AP are likely to be at 3.7 per cent and 3.8 per cent of their respective GSDP while their outstanding debts may stand at 23.8 per cent and 33.3 per cent of respective GSDP in FY24E. As per the analysis of 2023-24 budgets of 27 States & union territories by MOFSL, the GMBs of all States are budgeted at 3.3 per cent of the GDP and NMBs are budgeted at 2.4 per cent of GDP in FY24E.

According to the RBI’s data, actual State GMBs/NMBs stood at 2.8 per cent/2 per cent of GDP in last year. Outstanding debt of States is budgeted to grow 11.5 per cent YoY, taking it to 28.3 per cent of GDP in FY24E, slightly higher than 28 per cent of GDP in FY23RE. States’ debt was at a 15-year high of 31 per cent of GDP in FY21, up from 25 per cent of GDP in the pre-Covid years.

The Indian States have budgeted a fiscal deficit of 3.1 per cent of GDP in FY24E against 3.4 per cent of GDP in FY23RE and 2.7 per cent of GDP in FY22. Aggregate receipts of all States are budgeted to grow 10.9 per cent YoY in FY24E, following 20 per cent /25.4 per cent growth in FY23RE/FY22. Interestingly, the entire growth is likely to be led by states’ own receipts, as Center’s support is expected to be stagnant in FY24.

Total receipts, thus, budgeted to stay unchanged at an all-time high of 14.4 per cent of GDP in FY24E. Total spending of states is budgeted to grow 9 per cent YoY in FY24E, following 24.1 per cent /14.3 per cent growth in FY23RE/ FY22.

Combining the 2023-24 budgets of the Union government and MOFSL’s estimates of State governments suggests that total receipts of the general government are budgeted to rise 12.8 per cent YoY in FY23RE and 14.2 per cent YoY in FY24BE.

Aggregate spending, however, is budgeted to increase 10 per cent YoY in FY24BE, following a growth of 15.3 per cent in FY23RE. Accordingly, the combined fiscal deficit is budgeted to decline to 9 per cent of GDP in FY24BE, from 9.8 per cent of GDP in FY23RE (and 9.4 per cent of GDP in FY22).