The government has raised borrowing limit of states from 3 to 5% of Gross State Domestic Product, as part of its economic package amid COVID-19 outbreak.
Finance Minister Nirmala Sitharaman on Sunday said that the government has raised the borrowing limit of states from 3 per cent of Gross State Domestic Product to 5 per cent in 2020-21. This will add an extra availibility of Rs 4.28 lakh crore for the states.
States have so far borrowed only 14 per cent of the limit which is authorised to them. 86 per cent of the limit remains unutilised. Centre has decided to increase borrowing limits of states from 3 per cent to 5 per cent of Gross State Domestic Product (GSDP) for 2020-21, the finance minister announced on Sunday.
"The states have seen a sharp decline in the revenue, we have consistently extended help to the states. Revenue Deficit Grants to states of Rs 12,390 crores was given on time in April and May despite Centre's stressed resources; devolution of taxes of Rs 46,038 in April given fully," Sitharaman added
"To promote state-level reforms, part of the borrowing will be linked to specific reforms like increasing job creation through investment and promoting urban development, health and sanitation," the finance minister said.
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