Faced with the global financial crisis, the States were thus on a relatively firm ground having left with some fiscal space and accordingly given additional allocation of open market borrowings equivalent to 0.5 percentage point of a State’s GSDP as a part of the second fiscal stimulus package over and above the mandated 3.0 per cent during 2008-09.
Impact on States’ borrowings During 2008-09, the increase in net market borrowings of States has met with some investor fatigue reflecting the bunching of borrowings by States during the second half and the additional market borrowings by the Centre (Rs.1,16,000 crore or 2.1 per cent of GDP) over and above the budgeted amount.