REFORM LINKED BORROWING

Subject: Economy

Context: States implementing key institutional reforms can borrow Rs 1.06 lakh crore more.

Concept:

The Finance Ministry has permitted additional borrowings of Rs 1.06 lakh crore as at March-end to those states which have carried out some key institutional reforms. Last October, the Central government had linked permission for additional borrowing of 1 per cent of their GSDP (Gross State Domestic Product) to implementation of four critical reforms.
Sources said additional borrowing limit of Rs 37,600 crore has been given to states for implementing the ‘One Nation One Ration Card’ system, while another Rs 39,521 of borrowing has been allowed to 20 states that implemented Ease of Doing Business reforms.
Eleven states that have implemented urban local body and utility reforms have been given additional borrowing limits of Rs 15,957 crore. Another 17 states received borrowing limit of Rs 13,201 crore in lieu of power sector reforms.
In providing leeway for extra borrowings, the Centre had stressed on the need to push reforms in citizen-centric areas and processes.