The Madhya Pradesh Government is rapidly implementing major infrastructure projects, including roads, expressways, irrigation systems, dams, canals, power projects, medical colleges, schools, colleges and other large-scale development works, while maintaining sound fiscal management. To mobilise the funds required for these projects, the State Government raises loans through the Reserve Bank of India (RBI), within the limits prescribed under the Fiscal Responsibility and Budget Management (FRBM) Act and the borrowing limit set by the Government of India. The government’s clear policy is to use borrowings for development and creation of capital assets, and not for routine revenue expenditure.
Timely or early completion of development projects delivers long-term benefits to society and has a positive impact on the economy. State governments raise loans through the RBI from time to time, as required, within the borrowing limits prescribed by the Government of India, and repay them periodically. Under this system, the RBI conducts auctions every Tuesday, in which state governments participate twice a month according to their requirements.
For the financial year 2026-27, the Government of India has fixed Madhya Pradesh’s borrowing limit at approximately ₹87,000 crore. The State Government utilises borrowings within this limit for development works, particularly capital projects related to irrigation, roads and power. As of September 2026, the State Government has raised ₹37,400 crore through the RBI.
It is also pertinent to note that active implementation of projects such as dams, canals, roads, expressways and power infrastructure requires additional financial resources. Borrowing from time to time for project-based capital expenditure is therefore a positive step, reflecting the State Government’s accelerated pace of development.
Competitive bids for State Development Loans (SDLs) are received through the RBI’s e-Kuber platform. This enables the State Government to raise funds from the market at the most competitive and favourable interest rates available through the RBI.
Madhya Pradesh also has a strong record of fiscal management, with 100 per cent timely repayment of loans raised in previous years. The State has never defaulted on its repayment obligations.
Loans raised by Madhya Pradesh through the RBI are used exclusively for capital expenditure, including development works such as roads, power and irrigation. No separate borrowings are raised for routine revenue expenditure such as salaries or social welfare obligations, including the Ladli Behna scheme.
It is also noteworthy that the State Government has not imposed any unusual increase in taxes to mobilise resources for development works. The funds required for development projects are being arranged through the borrowing limit determined in line with the growing GSDP and the State’s own resources, without imposing an additional tax burden on the public.
Key Facts and Figures
Under Article 293(3) of the Constitution, state governments raise loans with the consent of the Government of India. The annual borrowing limit is generally up to 3 per cent of GSDP.
An increase in GSDP enhances a state government’s borrowing capacity.
Development projects such as roads, power infrastructure, dams and canals contribute to GSDP growth, thereby creating greater borrowing capacity for the State Government.
Under the Benchmark Issuance Strategy, the RBI determines two auction participation days every month for each state, within its borrowing limit. For Madhya Pradesh, the designated day is Tuesday.
In financial year 2026-27, the Madhya Pradesh Government plans to raise loans of up to ₹87,000 crore, against which ₹37,400 crore has already been raised. The State Government will raise further loans through the RBI from time to time, as required, for development works up to March 2027.
During the current financial year, the Madhya Pradesh Government aims to spend more than ₹1 lakh crore on roads, dams, power and canal construction through its own revenues, funds raised by various corporations and borrowings through the RBI. Achieving this target would be a major milestone for the State Government. Thousands of crores worth of road projects, the Ken-Betwa and Parvati-Kalisindh-Chambal river-linking projects, along with major dam and canal works associated with these projects, are currently under implementation.
The State Government is not only undertaking road construction, the Ken-Betwa Project, the Parvati-Kalisindh-Chambal River Linking Project, dams, canals and power projects, but is also implementing several other development works, including construction of schools and colleges, university expansion, medical colleges and infrastructure under the Police Department for public safety. Expenditure of around ₹1 lakh crore is estimated on these development works during the current year. Such a substantial allocation has been made possible by the sustained annual growth in GSDP. Growth in GSDP increases the State’s eligibility to borrow up to the prescribed 3 per cent limit, enabling Madhya Pradesh to finance these development projects.
Madhya Pradesh’s Debt-to-GSDP ratio, an important indicator of fiscal management, stands at 32.53 per cent, which is in line with prevailing norms.
Another key fiscal indicator—the ratio of interest payments to revenue receipts—remains at around 10–11 per cent, which is considered a safe level.
The Madhya Pradesh Government remains committed to maintaining fiscal discipline.
