Indian states, UTs to borrow ₹5L crore in Q4 FY26
03 Jan 2026

India's states and union territories are set to borrow around ₹5 lakh crore in the January-March 2026 period.

The amount is marginally higher than the ₹4.73 lakh crore borrowed during the same period last year.

The upcoming borrowing is also 1.77 times more than what was borrowed in the previous quarter (Q3 FY26).

Increased borrowing could impact interest rate environment
Market implications

Ajay Manglunia, Executive Director at Capri Global Capital Ltd, has warned that the increased borrowing could affect the interest rate environment.

He predicts that yields on State Government Securities could rise by 10-15 basis points due to this increased supply of paper.

This change may also have an effect on corporate bond yields, although G-Sec yields are expected to remain unaffected.

RBI's indicative calendar for borrowing
Borrowing timeline

According to the Reserve Bank of India (RBI)'s indicative calendar for states and union territories, their combined borrowing was ₹2.73 lakh crore in Q1 FY26, ₹2.86 lakh crore in Q2 FY26, and ₹2.81 lakh crore in Q3 FY26.

The upcoming borrowing period will see a significant jump from these previous figures, highlighting an upward trend in fiscal borrowing by these entities.