Four states namely Punjab, Haryana, Assam, and Himachal Pradesh have been allowed to borrow additional Rs 5,034 crore in order to implement the Ease of Doing Business reforms, according to a recent statement from the Ministry of Finance. The amount can be raised through “Open Market Borrowings”, the statement read.
In May 2020, the Government of India had increased the borrowing limit by 2 per cent of the Gross State Domestic Product (GSDP) for states deeply impacted with resource shortage due to the COVID-19 pandemic. However, to avail the new limit, it was mandatory to implement citizen-centric reforms with half of the borrowed amount.
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Previously, these reforms were accepted and practiced by eight other states including Kerala, Rajasthan, Odisha, Tamil Nadu, Madhya Pradesh, Telangana, Andhra Pradesh, and Karnataka. Therefore, these 12 states, in total, will receive additional borrowing permission worth Rs 28,183 crore from the Department of Expenditure, Ministry of Finance, after the reforms promoting Ease of Doing Businesses are successfully implemented.
Citizen-centric reforms have four formats – Ease of Doing Business, One Nation One Ration Card, power sector reforms, and local body reforms.
By implementing at least one of the four citizen reforms, 17 states have successfully availed the extra borrowing permission from the government as of now. Maximum states (12) opted for One Nation One Ration Card System and Ease of Doing Business (12). Five states have done local body reforms while merely two states chose the power sector.
As per the government, the current total additional borrowing permission given to the states on the basis of linked reforms is worth Rs. 74,773 crore.