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States' borrowing capacity raised from 3% of GDP to 5% for 2020-21 only, says FM


New Delhi, May 17: Finance Minister Nirmala Sitharaman on Sunday said that states net borrowing ceiling for 2020-21 is Rs 6.41 lakh crore based on 3% of GSDP.

States have borrowed only 14% of authorised limit, says FM

"75 percent of thereof was authorised to them in March 2020 itself and timing are left to the states. States have so far borrowed only 14% of the limit authorisation limit. 86% of the authorised borrowing remains unutilized." she added.

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In view of the unprecedented situation, the Centre has decided to accede to the request of states and increase the borrowing limits of states from 3% to 5% for 2020-21 only. "This will give states extra resources of Rs 4.28 lakh crore," she said.

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Sitharaman said, "Part of the borrowing by states will be linked to specific reforms. From 3-3.5%, the 0.5% will be an unconditional increase. Next 1% to be released in 4 tranches of 0.25%, with each tranche linked to clearly specified, measurable, and feasible reform actions. Further 0.5% will be given if milestones are achieved in at least three out of the four reform areas."

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