Finance Ministry allows 5 states to raise Rs 9,913 Crore as additional borrowings
The centre had in May 2020 allowed an additional borrowing limit of up to 2 percent of Gross State Domestic Product (GSDP) to the States for the year 2020-21 in the wake of the COVID-19 pandemic.
The Union Finance Ministry has granted permission to five states to raise additional financial resources of Rs 9,913 crore for meeting reform targets through open market borrowings. The five states are Telangana, Andhra Pradesh, Karnataka, Goa and Tripura.
The Ministry confirmed this in an official statement on September 24th, which read that the Department of Expenditure, Ministry of Finance, has granted permission to raise additional financial resources of Rs 9,913 crore to five states through Open Market Borrowings (OMBs).
The permission has been granted to these states after they successfully met the reform condition of the implementation of the 'One Nation One Ration Card'.
Following is the state-wise details of the additional borrowing permission granted by the centre:
1. Andhra Pradesh-Rs 2,525 crore
2. Telangana - Rs 2,508 crore
3. Karnataka - Rs 4,509 crore
4. Goa- Rs 223 crore
5. Tripura-Rs 148 crore
Additional Borrowing by States
The centre had in May 2020 allowed an additional borrowing limit of up to 2 percent of Gross State Domestic Product (GSDP) to the States for the year 2020-21 in the wake of the COVID-19 pandemic. As per this, an amount of about Rs 4,27,302 crore was made available for the states.
One percent of the amount was made available subject to the implementation of four specific State-level reforms, with each reform carrying a weightage of 0.25 percent of GSDP. The reforms are as follows:
1. Implementation of One Nation One Ration Card System
2. Ease of doing business reform
3. Urban Local body/ utility reforms
4. Power Sector reforms
The remaining additional borrowing limit of one percent was meant to be released in a set of two installments of 0.50 percent each. The first immediately to all the States as untied and the second installment after undertaking at least 3 out of the above four mentioned reforms.
The centre had already granted permission to states to raise the first 0.50 percent as OMB in June 2020. The move had made an additional amount worth Rs 1,06,830 crore available to the States.