State bank guarantees reach record high of ₹62,569 crore in FY 2024-25
₹ 62,569 crore in FY 2024-25
According to the documents tabled by the finance department in the legislative assembly on Friday, the government gave bank guarantees for loans of ₹62,569 crore in FY2024-25. One of these pertains to the Maharashtra State Electricity Distribution Company Limited (MSEDCL), a PSU that raised a loan of ₹35,469 crore in September 2024 to repay dues to Maharashtra transmission and power-generation companies such as the Rural Electrification Corporation Limited, Power Finance Corporation Limited and Hudco.
The government also stood guarantee for ₹15,000 crore borrowed by the Maharashtra State Road Development Corporation for land acquisition for the Virar-Alibaug Multimodal Corridor; ₹12,000 crore raised by MMRDA from the Rural Electrification Corporation Limited for implementation of infrastructure projects; and for a loan of ₹100 crore taken by the Shabari Tribal Development Corporation for social schemes for tribals.
The PSUs were made to take the loans partly because of the government's failure to pay their dues. 'For instance, thousands of crores are owed to MSEDCL towards the cross-subsidy it gives to farmers,' said an official from the finance department. 'This has left it with no option but to take a loan—and this is all because of the financial burden on the exchequer because of populist schemes like Ladki Bahin.' The official said that the bank guarantees were nothing but indirect loans taken by the state government, which would add up to an estimated debt burden of ₹9.32 lakh crore in FY 2025-26.
The official also said that the bank guarantee would affect the credit ranking of the government in the market. With the addition of ₹62,569 crore in FY 2024-25, the total amount arising out of bank guarantees given by the state government has mounted to ₹1.44 lakh crore. It was ₹81,507 crore in FY 2023-24 from ₹66,726 crore in FY 2022-23. 'The 2024-25 figures are the highest in the state's history,' said the official.
Experts say that this is an alarming sign for the government. 'It is a known fact that ultimately the government ends up repaying the loans taken by PSUs,' said Rupesh Keer of Samarthan, an NGO that studies state finances. 'When the financial growth of a state is calculated, various factors, including GDP size, debt burden, job generation and industrial investment, are taken into consideration. The rising bank guarantees may have an adverse effect on the government's credit ranking.'
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