Kerala, Uttarakhand, Goa make use of raised borrowing limits

The Centre had recently given the go-ahead to 23 states to borrow more than 1 lakh crore above their limit for showing progress in implementing four key reforms, including seeding of ration cards with Aadhaar and direct benefit transfer to farmers in states where they received free electricity.

The stand out states are Kerala, Goa and Uttarakhand, which have implemented all four required reform measures, followed by Andhra Pradesh, Odisha, Madhya Pradesh and Telangana, which have implemented at least three of the four measures.

West Bengal refused to comply, said sources, adding that Maharashtra too didn’t raise a request to increase the borrowing limits, indicating that either it didn’t need extra funds or was still to achieve compliance in some areas. Delhi was not counted as a state for this exercise.

The Centre had increased the borrowing limits for states from 3% of the GSDP to 5%. Out of this, 1% was linked to showing progress on four sets of reform measures. The potential amount at play within this 1% was 2.14 lakh crore, of which permissions have been given for Rs 1.06 lakh crore, which shows more room is still available for borrowing.

The four sets of reform measures were — implementing nationalised ration card scheme, removing government discretion for ease of doing business by making renewal of licences under 12 commercial laws digital and bringing in a randomised process for selecting factories for inspection, setting a minimum floor rate by urban local bodies for property and sewerage tax, and rationalising electricity subsidy through DBT to farmers.

Each of these components weigh 25% in the matrix for granting approval to enhance borrowing limits. So far, Rs 37,600 crore have been granted for implementing the nationalised ration card scheme and Rs 39,521 crore for implementing ease of doing business laws.

Once approval is granted, states are free to utilise the borrowed funds for any purpose, unlike capital expenditure schemes under the AatmaNirbhar Bharat, which are tied to specific capital intensive projects.