Mumbai, Aug 17 (PTI) The borrowing cost for the states continues to decline for the second consecutive week, falling by 3 bps to 6.84 per cent at the latest weekly auctions held on Tuesday when seven states raised Rs 8,500 crore.

At 6.84 per cent, the weighted average cost across states and tenures is at a nine-week low and analysts have attributed the moderation to the softening of global commodity prices as well as domestic inflation. The yields have eased by 16 bps since the fourth week of June.

Also Read | India Failed to Draw Up Plan Well in Advance to Evacuate Its Citizens From Afghanistan, Says Sitaram Yechury.

According to rating agency Icra, the spread between 10-year state debt and G-secs eased to 74 bps at the auction due to primarily because of the moderate quantum of the issuance, which a decline of 11.6 per cent so far this year on an annualised basis.

According to Care Ratings, 23 states and Delhi have so far raised Rs 2.27 lakh crore as against Rs 2.57 lakh crore borrowed a year ago and is 16 per cent lower than the indicative auction calendar for this period.

Also Read | Taliban Announces ‘Amnesty’ Across Afghanistan, Urges Women to Join Government.

Even at 6.84 per cent, the cost of funds for the states nevertheless continues to be elevated and is notably higher than at the start of the FY'22 fiscal. The weighted average yield of state bonds is 28 bps higher than that in early April and has been above 6.75 per cent since June.

(The above story is verified and authored by Press Trust of India (PTI) staff. PTI, India’s premier news agency, employs more than 400 journalists and 500 stringers to cover almost every district and small town in India.. The views appearing in the above post do not reflect the opinions of LatestLY)