NEW DELHI, Oct. 1 -- State governments have sharply ramped up borrowings in the first half of FY26, turning to state development loans (SDLs) to fast-track infrastructure spending and bolster economic growth.

According to the latest RBI data, SDL issuances between April and September totalled Rs.5.01 trillion, up from Rs.3.86 trillion in the same period last year. September alone saw states raise over Rs.1.21 trillion, the highest monthly borrowing so far, reflecting urgency to fund development projects.

The trend builds on rising state debt. Total SDL borrowings in FY25 hit a record Rs.10.73 trillion, up 7% from FY24, driven partly by a historic Rs.4.34 trillion borrowed in Q4, FY25. Typically, states use low-cost funds such as tax rev...