India raises ₹20,461 crore in state securities auction

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Highlights

In the auction of state government securities, ₹20,461.29 crore were accepted against the target of ₹21,600 crore.
Gujarat, Punjab, and Uttarakhand approved partial or zero amounts in some of their issuances for 12-year, 7-year, and 9-year securities, respectively.
Strong demand and full acceptance in reissued papers indicate that investors are showing different behavior in the selection and pricing of long-term securities.

This article was translated from the original. Read the original version by our correspondent here.

Auction Results and Accepted Amount

According to the press release from the Reserve Bank of India, this yield and price-based auction was conducted for state government securities, including Andhra Pradesh, Assam, Gujarat, Jammu & Kashmir, Maharashtra, Punjab, Rajasthan, Telangana, and Uttarakhand. Against the plan to raise ₹21,600 crore, ₹20,461.29 crore was accepted, indicating a difference in demand and pricing for some issuances. The Reserve Bank of India provided this information.

Andhra Pradesh accepted the full amount in all its issuances, including reissued loans maturing in 2042 and 2056 with 6-year papers. Assam and Rajasthan also fully accepted their scheduled issuances, while Maharashtra and Telangana raised the entire planned amount through various reissued bonds.

Jammu & Kashmir accepted the full ₹500 crore in the reissue of the 7.81% Jammu & Kashmir SGS 2051 issued on June 10, 2026. On the other hand, Gujarat accepted ₹1,000 crore in the 8-year security but did not accept any amount in the 12-year security. Punjab accepted only ₹934.159 crore out of ₹1,000 crore in the 7-year security, while it took the full amount in its reissued loans maturing in 2041 and 2044. Uttarakhand accepted ₹427.131 crore out of ₹500 crore in the 9-year security.

Impact on the State Borrowing Market

This auction shows that states’ borrowing strategies are still based on different tenors and reissued securities, allowing them to balance cost and demand according to market conditions. The cut-off yields and prices also indicate that investor demand for longer-term papers varies by state and issuance structure.

Partial or zero acceptance in some issuances by Gujarat, Punjab, and Uttarakhand suggests that state governments are maintaining discipline on borrowing costs rather than accepting every bid. Full acceptance in other issuances also makes it clear that states with strong demand and reissued papers are receiving relatively better market responses, which remains a key indicator of pricing in the state development loan market.

Our previous report discussed the steps taken by the government and RBI to attract foreign capital, including tax relief on government bonds for FPIs, expansion of the Fully Accessible Route, and measures to increase foreign exchange liquidity. That article noted that these policy changes could somewhat ease pressure on the balance of payments and banking funding, although they are considered a partial solution compared to the required capital inflows.

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