At this level, the gross borrowings would be 18 per cent below the previous year's figure of Rs 13,706 crore, Reserve Bank of India (RBI) said in its report "State Finances - A study of budgets of 2000-01" here on Wednesday.

During the current fiscal up to December 5, 2000, the aggregate market borrowings of states stood at Rs 10,083 crore constituting 89.6 per cent of their gross market borrowing programme (provisional) for the full financial year. The coupon rates began to firm up after April, 2000 in the subsequent borrowings in tandem with the market conditions.

Net market borrowings raised by state governments rose from Rs 3,364 crore in 1991-92 to Rs 12,405 crore in 1999-2000 against the original allocation of Rs 10,966 crore.The gross amount raised through pre-announced issues was Rs 12,906 crore, while Rs 800 crore was raised via the auction route in 1999-2000, the study said.

On ways and means advances (WMA) RBI said during current fiscal, up to November 30, as many as 19 states resorted to overdraft and three states could not clear their overdrafts with the apex bank, leading to suspension of their payments.

During the previous fiscal, 19 states resorted to overdraft, seven of them frequently. Two states could not clear their overdrafts within the stipulated time and consequently the apex bank had to stop payments on their behalf. Due to the reorganisation of states, the existing normal WMA limits for Madhya Pradesh, Uttar Pradesh and Bihar have been divided in the same ratio as the revenue sharing formula approved by the centre for the new states of Chattisgarh, Uttaranchal and Jharkhand, respectively.

RBI has increased the normal WMA limits by 30 per cent for all the six states.Besides, the three-day restriction for slippage of payments in Overdraft Regulation Scheme (ORS) has been relaxed for these six states effective from October 31, 2000.

The increase in normal WMA limits and relaxation in ORS would be effective up to March end 2001. The outstanding level of WMA and overdrafts of statesfrom RBI were placed at Rs 7,519 crore as on March 31, 2000 as compared to Rs 4,818 crore in the previous year.

Large contingent liabilities pose credibility risk to states
State governments are faced with the problem of contingent liabilities arising out of guarantees extended by them, as a means to maintaining public investments at the state level.

The outstanding state government guarantees (of 17 major states) as a ratio to gross domestic product stood at 5.1 per cent on March-end 2000 as against 4.7 per cent in previous year, the RBI said in the study. The nominal stock of state level guarantees witnessed an annual average growth of 12.2 per cent between March 1992 and March 2000. The debt stock of the states is estimated to scale up to 22.9 per cent of GDP by March 2001 from 21.5 per cent in the previous year. RBI said the immediate concern about the current level of debt was due to the recent accretion of debt at relatively high interest rates.

The interest payments burden has grown from 13 per cent of revenue receipts in 1990-91 to as high as 21.2 per cent in 1999-2000 and would further rise to 22.2 per cent in current fiscal, it added.

During 1999-2000, the public account liabilities witnessed a growth of about 28 per cent and emerged as the fastest growing component of state debt.Primary deficit of the states which stood at 1.8 per cent (GDP) during 1990-91 increased to 2.5 per cent during 1999-2000.

(PTI)