States borrowing costs continue to rise
On Tuesday, the cost borrowing from the states was reversed at the auctions held, they scaled back to 7 per cent.
According to a note by the Care Ratings chief economist Madan Sabnavis, the weighted average cost of borrowings for the state rose to 6.99 per cent across tenures compared to the last auctions held last week, they were 7 bps higher. 
Since the third week of June, the cost of borrowings from the state has been dictating over 6.9 per cent. It has observed a rise since mid-June by almost 24 bps, and since the first auction of state government bonds on April 8, when it was almost 43 bps.
There are an 88 bps spread between the 10- year state debt and the earnings of new 10-year G-Secs. He also added that this spread had risen from almost 50 bps in early April. On Tuesday, almost ₹18,700 crores were raised by twelve states.
Maharashtra and Gujarat accepted an additional ₹500 crore and ₹250 crores respectively, over and above the notified amount. The rest of the states accepted the notified amount only. Share of 10-year state bonds increased in July from 24-45 per cent in Q1 to around 54 per cent
