Centre Increases Borrowing Limit For States To 5 Per Cent Of State GDP To Infuse Additional Rs 4.28 Lakh Crore

Finance Minister Nirmala Sitharaman in her final tranche of Atmanirbhar Bharat announcements on Sunday (17 May) increased the borrowing limit for states from 3 per cent of the Gross State Domestic Product (GSDP) to 5 per cent for the financial year 2020-21.

This special increase in borrowing will put an additional Rs 4.28 lakh crore in the hands of the states which otherwise could borrow a total of 6.41 lakh crore in this financial year under the 3 per cent limit.

While this borrowing limit increase was demanded by various states, the Finance Minister pointed out that states are yet to utilise 86 per cent of the previously allocated Rs 6.41 lakh crore.

The Finance Minister added that the states would have to invest part of their borrowing to carry out reforms like improving the ease of doing business, universalising “One Nation One Ration Card”, promoting urban development, health and sanitation, increasing job creation and making the power sector sustainable.