State borrows Rs 2,000 crore from RBI

 
The borrowing comes at a time when the state had to channelise more than Rs 1,000 crore during the last two months for rehabilitation measures in the 14 flood hit districts of North Karnataka.

To top it, the state’s own revenue generators - commercial taxes, excise, stamps and registration and motor vehicles tax -  is facing a dip due to economic slowdown. This is the fourth time the state has entered the market this fiscal. The RBI on auctioned Rs 2,000 crore government stock in Mumbai on November 24. According to sources in the finance department,  the rate of interest payable by the state on the securities auctioned is 8.05 pc. In all, the state has so far borrowed Rs 4,500 crore so far this fiscal for implementing the annual plan 2009-10. 

According to the budget estimates for 2009-10, the state had projected that it would borrow Rs 6,061 crore this fiscal. Given the pace of the recovery of the economy and the funds needed for flood rehabilitation the borrowings could shoot much above the projection.