NEW DELHI: Treasury on Sunday five states, including Tamil Nadu and Telangana, they have been allowed to borrow an additional 16,728 crore following the completion of the reforms stipulated for ‘The ease of doing business‘.
Andhra Pradesh, Karnataka and Madhya Pradesh are the other states that have been allowed to borrow the additional amount.
In May, the government had decided to link the granting of additional loan permits to states with reforms undertaken by them to facilitate business activity.
The reforms stipulated in the category include the completion of the first assessment of the ‘District Business Reform Action Plan’.
Furthermore, the elimination of the requirements for the renewal of registration certificates / approvals / licenses obtained by companies for various activities, at least under certain laws specified by the Center, was also part of the reforms.
“So far 5 states have completed the reforms stipulated in Ease of Doing Business. These states have been granted permission to mobilize additional financial resources in the amount of Rs 16,728 crore through open market loans,” the Ministry said in a statement.
To meet additional funding requirements from states due to the COVID-19 pandemic, the Center had decided in May to increase states’ borrowing cap by 2 percent of their State Gross Domestic Product (GSDP), by above 3 percent. penny limit established under the Fiscal Responsibility and Budget Management Act (FRBM).
However, states were required to complete four specific reforms: implementation of ‘One nation, one Ration card‘, Ease of Doing Business Reforms, Local Urban Agency / Utility Reforms, and Power Sector Reforms, by February 15, 2020 to reap the benefits.
Such states would get the ability to obtain additional loans equal to 0.25 percent of their GSDP to complete each reform. Under this mechanism, states can obtain additional loans of up to Rs 2.14 lakh crore upon completion of the four reforms.
“So far, 10 states have implemented the One Nation One Ration Card system, 5 states have carried out Ease of Doing Business reforms and 2 states have carried out reforms to local agencies,” the Ministry added. PTI JD
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