State Debt Repayments To Surge As Rs 24 Tn SGS Matures By FY2032: ICRA

New Delhi, Jul 28 (KNN) State government debt repayments are set to rise sharply over the next few years, with the redemption profile of state government securities (SGS) remaining highly front-loaded. An estimated Rs 24 trillion is set to mature between FY2028 and FY2032, according to a report by ICRA.

State governments rely heavily on SGS to fund their fiscal deficits, and borrowings are expected to remain high. The total outstanding SGS stock more than doubled to Rs 73 trillion as of March 31, 2026, from Rs 32.7 trillion in March 2020. This amount is nearly 58 per cent of the Centre’s outstanding securities, ANI reported.

State-wise Exposure

The repayment burden is concentrated among a few large states, including Tamil Nadu, Maharashtra, Uttar Pradesh, West Bengal and Karnataka. Together, these states account for nearly half of the total outstanding SGS. Tamil Nadu alone has the highest share at Rs 8.3 trillion, while the others hold between Rs 5 trillion and Rs 7 trillion each.

Maturity Trends

The report noted that states have increasingly issued longer-term securities, raising the weighted average maturity of SGS to 9.8 years as of March 2026, compared to 7 years in March 2020. Despite this, about one-third of the total outstanding debt is due for repayment in the five-year period ending FY2032. 

Another Rs 20.3 trillion is expected to mature between FY2033 and FY2037, with the remaining debt spread over later years up to FY2064.

Outlook

The concentration of repayments in the near term suggests that gross borrowing by states is likely to remain elevated over the next five years. The trend points to continued pressure on state finances, depending on market conditions and fiscal management strategies.

(KNN Bureau)