Finance Ministry said five states, including Tamil Nadu and Telangana, were able to borrow an extra 16,728 crore

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Finance Ministry said five states, including Tamil Nadu and Telangana, were able to borrow an extra 16,728 crore

In May, the government agreed to attach the issuance of additional borrowing permits to States to changes initiated by them to make it easier to do business. On Sunday, the Finance Ministry said five states, including Tamil Nadu and Telangana, were able to borrow an extra 16,728 crore after completion of the stipulated ‘Ease of Doing Business’ reforms.

The other states that have been allowed to borrow the extra amount are Andhra Pradesh, Karnataka, and Madhya Pradesh.

In May, the government agreed to attach the issuance of additional borrowing permits to States to changes initiated by them to make it easier to do business.

The changes listed in the group include the completion of the first ‘District Level Market Improvement Action Plan’ review.

Furthermore, it was also part of the reforms to abolish the conditions for renewal of registration certificates/approvals/licenses received by companies for different operations, at least under certain Actions specified by the Centre.

“5 states have so far completed the stipulated reforms in the Ease of Doing Business. These states have been granted permission to mobilize additional financial resources to the tune of ₹16,728 crores through open market borrowings,” the Ministry said in a statement.

The Centre agreed in May to increase the borrowing cap of States by 2 percent of their Gross State Domestic Product (GSDP) to fulfill the extra fund needs of States due to the COVID-19 pandemic, over and above the 3 percent limit imposed under the Fiscal Responsibility and Budget Management (FRBM) Act.

Nevertheless, States were expected to complete four unique reforms by February 15, 2020, to achieve the benefits: introduction of the ‘One Country, One Ration Card’ scheme, ease of doing business reforms, urban local body/utility reforms, and power sector reforms.

These states will gain an additional credit facility equal to 0.25 percent of their GSDP to complete each amendment. Under this facility, on completion of all four reforms, additional borrowing of up to ~ 2.14 lakh crore is available to the states.

“So far 10 States have implemented the One Nation One Ration Card system, 5 States have done Ease of Doing Business reforms, and 2 States have done local body reforms,” the ministry said.

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