This Article is From Dec 26, 2020

Government Allows Additional Borrowing Of Rs 19,459 Crore For Six States

Ease of Doing Business: Rajasthan, along with Karnataka, Andhra Pradesh, Tamil Nadu, Madhya Pradesh, and Telangana are the six states which have completed the reforms

Government Allows Additional Borrowing Of Rs 19,459 Crore For Six States

Ease of Doing Business: Six states have been granted additional borrowing permission

Ease of Doing Business: Rajasthan has become the sixth state in the country to undertake and successfully complete the ease of doing business reform stipulated by the Department of Expenditure of Ministry of Finance, and has become eligible for additional borrowing of Rs 2,731 crore, through open market borrowings. In a recent statement issued by the Ministry of Finance, Rajasthan has now joined the five other states namely, Karnataka, Andhra Pradesh, Tamil Nadu, Madhya Pradesh, and Telangana, which have completed the reforms. Hence, upon completion of reforms facilitating the ease of doing business, the six states have been granted additional borrowing permission of Rs.19,459 crore. (Also Read: States Select Centre's Borrowing Option 1 To Meet GST Shortfall )

The ease of doing business is a significant indicator of the investment-friendly business climate in the country. The improvements in the ease of doing business will enable faster future growth of the state economy. In May 2020, the government had decided to link the grant of additional borrowing permissions to the states which complete the reforms to facilitate ease of doing business. The reforms stipulated in this category are as follows:

  • The completion of the first assessment of district-level business reform action plan
  • The elimination of the requirements of renewal of registration certificates or licenses obtained by businesses under various acts.
  • The implementation of computerized central random inspection system under the acts wherein allocation of inspectors is done centrally, the same inspector is not assigned to the same unit in subsequent years, prior inspection notice is provided to the business owner, and the inspection report is uploaded within a period of 48 hours of the inspection.            

On May 17, 2020, in order to tackle the resource demand challenges amid the COVID-19 crisis, the government had enhanced the borrowing limit of the states by two percent of their gross state domestic product (GSDP). 50 per cent or half of this was linked to undertaking the citizen centric reforms by the states. (Also Read: Government To Allow Additional Borrowing For States Which Complete Specific Reforms )

The four identified citizen centric areas for reforms were as follows:

  • The implementation of One Nation One Ration Card system
  • The ease of doing business reform
  • The urban local body or utility reforms
  • Power sector reforms

10 states across the country have implemented the One Nation One Ration Card system so far. Six states have now completed ease of doing business reforms, and two states have undertaken local body reforms.

The total additional borrowing permission issued so far to the states which have undertaken the various citizen-centric reforms stands at Rs.­­ 50, 253 crore.