GOI permitted additional borrowing of Rs 16,728 Cr to Five States

The Government of India has granted permission for additional mobilise additional financial resources to the tune of Rs 16,728 crore through open market borrowings to five states.

"The permission has been granted as the state have so far completed the stipulated reforms in the ease of doing business. These states are Andhra Pradesh, Karnataka, Madhya Pradesh, Tamil Nadu and Telangana," said a Finance Ministry statement.

On May 17, 2020, considering the resource requirement to meet the challenges due to the pandemic, the government had enhanced the borrowing limit of the above mentioned states by 2 per cent of their GSDP. Half of this special dispensation was linked to undertaking citizen centric reforms by the states.

The four citizen centric areas for reforms identified were implementation of 'One Nation One Ration Card' system, ease of doing business reform, urban local body or utility reforms and power sector reforms.

So far 10 states have implemented the One Nation One Ration Card system; five States have done 'ease of doing business' reforms; and two states have done local body reforms.

Besides additional borrowing permissions, the states completing three out of the four reforms entitled to get additional financial assistance under the "Scheme for Financial Assistance to States for Capital Expenditure".

An amount of Rs 2,000 crore is designated for the same purpose under the scheme.

"The Department of Expenditure, Ministry of Finance had recently extended the deadline for the states to complete citizen centric reforms in various sectors, in order to facilitate more states to undertake the reforms and avail additional borrowings. Now, if the recommendation from the nodal ministry concerned regarding implementation of the reform is received by February 15, 2020, the state will be eligible for reform linked benefits," said the statement.