States raise record ₹50,206 cr. in debt, push up bond yields

Context: India’s direct tax collections have exceeded 97% of the revised target for 2023-24.

• Total borrowings for the fiscal year are expected to be lower than projected.

Impact:

1. Increased borrowing by states led to liquidity pressures, causing bond yields to rise.
2. A bond yield is the return an investor expects to receive on a bond investment each year, expressed as a percentage
3. The gap between central and State government bond yields widened.
4. Rising bond yields are expected to increase borrowing costs for both central and State governments.