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In a significant move to boost fiscal resources, 11 Indian states are scheduled to raise a combined ₹270 billion (₹27,000 crore) in market borrowings on September 23, 2025. The states will issue loans of varying maturities ranging from 7 years to 26 years, including tenors at 7, 10, 11, 18, 20, 21, 22, 23, 24, 25, and 26 years. This borrowing exercise is part of the states’ efforts to finance infrastructure projects, developmental activities, and broader fiscal needs as per the borrowing calendar guided by the Reserve Bank of India (RBI).
Wide Range of Loan Tenors
The borrowing includes a broad spectrum of maturities allowing states to optimize debt servicing in line with their fiscal profiles and market conditions.
Loan durations include shorter medium-term notes (7, 10, and 11 years), along with long-term bonds extending up to 26 years, providing flexibility in funding timelines.
Purpose and Strategic Rationale
The raised funds are expected to primarily support infrastructure development, social welfare schemes, and various capital expenditure projects across participating states.
This market borrowing forms a critical part of states’ annual borrowing programs, helping bridge gaps arising from revenue shortfalls and increased expenditure commitments.
By accessing the bond markets, states aim to enhance capital inflows while managing fiscal discipline as per the recommendations of the 15th Finance Commission.
Participating States and Borrowing Amounts
While the exact breakdown per state will be disclosed closer to the auction date, the collective borrowing sums up to ₹270 billion, with multiple states synchronizing their debt issuances on this date for market efficiency.
Previous quarterly borrowing plans saw states collectively raising upwards of ₹2.87 lakh crore, evidencing the scale and importance of state development loans (SDLs) in India’s financial ecosystem.
Market and Investor Impact
The multi-tenor issuance is expected to attract a diverse investor base, including mutual funds, insurance companies, and banks looking for stable, long-duration debt instruments.
The spread of maturities also allows investors to tailor their portfolios with varied yield curves and duration preferences, supporting liquidity in state bond markets.
The borrowing drive comes amid sustained investor appetite for government securities, reinforced by India’s stable macroeconomic outlook and accommodative monetary policy stance.
RBI and Regulatory Oversight
The Reserve Bank of India regularly coordinates with state governments and announces borrowing calendars to ensure transparency, liquidity management, and to avoid market disruptions.
The plan adheres to RBI norms on state borrowing limits, ensures compliance with the Fiscal Responsibility and Budget Management Act, and aligns with the government’s fiscal consolidation roadmap.
Conclusion
The ₹270 billion borrowing by 11 states on September 23, 2025, marks a key milestone in India’s ongoing efforts to sustainably finance its development agenda through market borrowings. By issuing loans across varied tenors, states can balance fiscal responsibility with capital needs while providing investors with attractive and diversified debt options. The RBI’s guidance and systematic borrowing calendar play a vital role in maintaining market confidence and ensuring orderly public debt management. Market participants will closely monitor the auction outcome, which is expected to reaffirm India’s robust state debt market and financing landscape.
Sources: PIB Press Release, Moneycontrol, Economic Times, Ministry of Finance DEA, Indian Express
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