India state borrowing and spending practices were in focus on October 27, 2026, as Reserve Bank of India Governor Sanjay Malhotra urged state governments to prioritize quality expenditure and prudent borrowing and cash management.

India state borrowing and liquidity support

Malhotra addressed the 36th conference of state finance secretaries, where participants reviewed states’ market borrowings and the RBI’s short-term financial support. The central bank provides liquidity to states and union territories to help them manage mismatches between receipts and payments.

A high-level panel reviewing the central bank’s liquidity had noted in September that some states remained overly dependent on RBI support, while a few maintained much higher cash balances to avoid emergency borrowing.

Digital lending and benefit transfers

Malhotra also urged states to join the Unified Lending Interface and use Programmable Central Bank Digital Currency for direct benefit transfers. His appeal did not amount to an announced mandate.

Finance secretaries from 27 states and three union territories attended the annual conference, alongside senior finance ministry, Controller General of Accounts and Comptroller and Auditor General officials. Malhotra released a compendium on cash and debt management for state governments at the event.

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