Finance minister Nirmala Sitharaman could pencil in more space for the states to borrow and spend in her next budget speech on February 1, 2022. The Centre has already begun to rejig the government savings market, reviving the RBI window for retail investors, the Retail Direct Scheme this month.

       While only central government papers are now part of the portfolio offered to the retail investors, the state papers could also be included soon. It will offer a larger set of investors to the state governments, but also put pressure on them to offer matching returns. The current state ...