Reform Linked Borrowing

  • January 19, 2022
  • Posted by: OptimizeIAS Team
  • Category: DPN Topics
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Reform Linked Borrowing

Subject – Economy

Context – ‘20 states express interest to avail extra borrowing’

Concept –

  • The Ministry of Finance had launched a programme in June last year to allow additional borrowing space of Rs 80,000 crore to states, which is conditional on them undertaking and sustaining specific reforms in the power sector.
    • There are three parameters a state must meet under the power sector reforms – reduction in Aggregate Technical & Commercial (AT&C) losses, targeted reduction in Average Cost of Supply and Average Revenue Realisation (ACS-ARR) gap, and direct benefit transfer (DBT) of electricity subsidy to farmers.
  • REC Ltd is working as nodal agency for implementation of the scheme, for the Ministry of Power.
  • Under the programme, the additional borrowing limit permitted for power sector reforms is 0.5 per cent of Gross State Domestic Product.
economy REFORM LINKED BORROWING