RBI: States and UTs to Borrow Rs 2.86 Lakh Crore in Q2 — What This Means for Economy

The Reserve Bank of India (RBI) has announced that Indian states and union territories together plan to borrow about Rs 2.86 lakh crore from the market between July and September 2025. This borrowing plan has been made after discussions between the RBI and state governments.

Borrowing to Begin July 1

The borrowing will start on July 1 with Rs 18,100 crore expected to be raised. The amount will be divided among several states. For example, Andhra Pradesh and Kerala each plan to borrow Rs 2,000 crore, while Maharashtra will raise the highest amount at ₹6,000 crore. Other participating states include Assam, Gujarat, Himachal Pradesh, Rajasthan, Tamil Nadu, Telangana, and West Bengal.

First Half Borrowing at Rs 8 Lakh Crore

As per the government’s borrowing roadmap for 2025–26, ₹8 lakh crore, or around 54% of the total annual borrowing target of ₹14.82 lakh crore, will be raised in the first six months. This will be done through weekly auctions of long-term government bonds called "dated securities." The government will hold 26 such auctions over the period.

Range of Securities and Maturities

These borrowings will be spread across bonds with different maturity periods – from 3 years to 50 years. The largest portion, around 26.2%, will come from 10-year bonds. Other key maturities include 15-year (14%), 40-year (14%), and 30-year (10.5%) bonds.

Fiscal Deficit Target and Capital Use

Finance Minister Nirmala Sitharaman has set a fiscal deficit goal of 4.4% of GDP for 2025–26. This is lower than the revised 4.8% for 2024–25. The fiscal deficit reflects the gap between the government’s income and spending, which is typically financed through borrowings.

According to the Union Budget presented on February 1, the central government plans to borrow a total of ₹15.4 lakh crore in FY 2025–26. Most of this borrowing will go toward capital projects, which help grow the economy without fueling inflation.