State Government Securities redemption profile remains highly front-ended as Rs 24 trillion SGS estimated to mature during FY28-FY32: ICRA
New Delhi, July 27
The redemption profile of state government securities remains highly front-ended, with an estimated Rs 24 trillion set to mature between FY2028 and FY2032, according to an ICRA report.
The report showed that gross market borrowings through state government securities, which serve as the chief source of funding the fiscal deficit of India's state governments, are projected to stay elevated over the next five years. Redemptions during the FY2028-FY2032 period will be dominated by states including Uttar Pradesh, Tamil Nadu, Maharashtra, and Gujarat.
ICRA estimated that the stock of outstanding state government securities more than doubled to Rs 73.0 trillion as on March 31, 2026, up from Rs 32.7 trillion recorded on March 31, 2020. This total was equivalent to nearly 58 per cent of the estimated stock of Government of India securities of Rs 125.7 trillion at the end of March 2026.
Tamil Nadu accounted for the highest individual share, with its stock of outstanding securities reaching Rs 8.3 trillion as on March 31, 2026. Maharashtra, Uttar Pradesh, West Bengal, and Karnataka followed, with their outstanding securities estimated in the range of Rs 5 trillion to Rs 7 trillion each at the end of March 2026.
Together, these top five states recorded a combined stock of securities worth Rs 33 trillion. This amount represented nearly half of the total outstanding state government securities of Rs 73 trillion as of March 2026-end.
"Over the years, with the increase in issuance of longer-dated SGS (more than 10 years), the weighted average maturity (WAM) of the stock of SGS rose to 9.8 years by end-March 2026 from 7.0 years at end-March 2020," the report stated.
Out of the total stock of Rs 73 trillion, redemptions amounting to Rs 24.0 trillion, or one-third of the total, fall due between FY2028 and FY2032.
"Another Rs 20.3 trillion is estimated to be redeemed during FY2033-FY2037," the report added, noting that "the balance amount would mature till FY2064."
These trends indicate a highly front-ended maturity profile of SGS, "implying that gross SGS issuance would remain elevated during the next five years i.e. FY2028-FY2032," ICRA stated .
— ANI
Reader Comments
Interesting data from ICRA. What strikes me is that TN alone has Rs 8.3 trillion outstanding - that's massive! I wonder if the state's revenue generation is keeping pace with this borrowing. We need more fiscal discipline at the state level, not just Centre.
Good that ICRA is highlighting this. But honestly, with infrastructure needs and welfare schemes, states have no choice but to borrow. The real test will be whether these investments generate enough economic growth to pay back. Also, UP being in top 5 is concerning given its population size. 😬
One thing people miss is that this also affects mutual funds and banks heavily invested in SGS. If redemptions spike, it could cause liquidity issues. The RBI and states need to coordinate better on this maturity profile. Just saying...
As a taxpayer in Maharashtra, this gives me sleepless nights. Our state's outstanding is around Rs 5-7 trillion - that's lakhs of crores! I hope the state government is using this money wisely for long-term projects and not just populist schemes. Otherwise, we'll be paying for decades. 😤
The WAM increasing from 7 to 9.8 years shows states are smartly managing maturity, but the front-loaded redemption is still worrying. Perhaps states should consider creating sinking funds or dedicated revenue streams for debt repayment. Otherwise, yaar, this is a recipe for fiscal stress.
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