RBI Governor Sanjay Malhotra urges states to ensure quality spending, prudent borrowing

Kolkata: Reserve Bank of India Governor Sanjay Malhotra on Tuesday urged state governments to ensure quality of expenditure, and adopt prudent borrowing and cash management practices for the benefit of their long term fiscal health.

Addressing the 36th conference of state finance secretaries at the Mint Road, Malhotra appealed the states to onboard onto the Unified Lending Interface (ULI) and utilise Programmable Central Bank Digital Currency (P-CBDC) for Direct Benefit Transfers (DBT).

The RBI provides liquidity support to state governments and union territories to tide over mismatches in their receipts and payments. Last month, a high-level panel to review the central bank's liquidity highlighted that some states remain over-dependent on RBI for liquidity support while a few maintains much higher cash balance to avoid emergency borrowing.


The meeting reviewed market borrowings by the states and RBI's short-term financial support.

The annual conference, circled around a theme of quality of expenditure, prudent debt management in enhancing states’ fiscal sustainability, was attended by finance secretaries of 27 states and three union territories. Senior officials from the ministry of finance, controller general of accounts and the comptroller & auditor general of India also participated.

Governor Malhotra released a booklet titled ‘Compendium on Cash and Debt Management for State Governments’ at the event.