In a significant move to meet their fiscal needs, seven Indian states collectively raised Rs 13,300 crore through the latest auction of State Government Securities (SGS). The Reserve Bank of India (RBI) released the data, confirming that all participating states secured the full amount they had notified for the auction.
Madhya Pradesh emerged as the top fundraiser, mobilizing Rs 4,800 crore through two securities. The state also offered the highest yields in the auction, 7.14 per cent on a 16-year security and 7.15 per cent on an 18-year security. This aggressive pricing strategy likely reflects strong investor confidence in the state’s financial health.
Maharashtra followed closely, raising Rs 4,000 crore with two securities featuring 20-year and 21-year tenors. Both securities offered a yield of 7.14 per cent, indicating steady demand for long-term state debt.
Bihar stood out for securing funds at the lowest yield in this round. The state raised Rs 2,000 crore through a 10-year security offering a cut-off yield of just 6.88 per cent. This makes Bihar’s issuance the most cost-effective in terms of interest burden.
Haryana, Jammu and Kashmir, Mizoram, and Telangana also participated in the auction. Haryana raised Rs 1,000 crore via a 16-year bond at a yield of 7.12 per cent. Jammu and Kashmir and Mizoram both opted for 15-year bonds, yielding 7.14 per cent and raising Rs 400 crore and Rs 100 crore respectively.
Telangana made a notable move by issuing the longest-tenor bond in the auction, a 30-year security that raised Rs 1,000 crore at a yield of 7.13 per cent. This demonstrates investor appetite for extended maturities.
The RBI conducted this yield-based auction as part of its scheduled borrowing calendar for states, a critical mechanism to help them fund capital expenditure and infrastructure projects. The strong demand across tenors ensured that no state faced under-subscription.
These auctions play a vital role in enabling states to finance development initiatives while adhering to fiscal discipline under the RBI’s macroeconomic framework. With investor interest remaining robust, such offerings continue to be a reliable tool for states to manage their financial requirements.