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FinMin gives nod to 11 states to borrow additional Rs 15,721 crore

New Delhi: The Finance Ministry has permitted 11 states to borrow an additional amount of Rs 15,721 crore after these states achieved the capital expenditure target set for the June quarter. These states are Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand.

"11 states.... have achieved the target set by the Ministry of Finance for the capital expenditure in the 1st Quarter of 2021-22. As an incentive, these States have been granted permission by the Department of Expenditure to borrow an additional amount of Rs 15,721 crore," the Ministry said in a statement.

The additional open market borrowing permission granted is equivalent to 0.25 per cent of their GSDP. Additional financial resources thus made available will help the States in pushing their capital expenditure further. The Ministry said capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth.

Accordingly, out of the net borrowing ceiling (NBC) of 4 per cent of GSDP for the states for 2021-22, 0.50 per cent of GSDP was earmarked for incremental capital expenditure to be incurred by the States during 2021-22. The target for incremental capital expenditure for each state to qualify for this incremental borrowing was fixed by the Department of Expenditure. To become eligible for incremental borrowing, States were required to achieve at least 15 per cent of the target set for 2021-22 by the end of April-June quarter of 2021-22, 45 per cent by the end of second quarter, 70 per cent by the end of third quarter and 100 per cent by March 31, 2022.

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