India Allows Five States To Borrow More As They’ve Met ‘One Nation, One Ration Card’ Condition

The central government has allowed five states to collectively borrow an additional Rs 9,913 crore from the market.

Andhra Pradesh, Telangana, Goa, Karnataka and Tripura have been allowed to borrow more after they met the condition to implement ‘One Nation One Ration Card’ system, which will allow migrants to procure foodgrains from anywhere across the country, according to a statement by the Ministry of Finance.

Of the five states, Karnataka can borrow the most and Tripura the least.

In May, the central government had allowed states to borrow an additional 2% of state GDP in 2020-21, over and above the 3% limit. Of the 2% allowed, 0.5% was unconditional. A further increase of 0.25% was linked to states performance in four areas—implementing One Nation-One Ration Card, ease of doing business, urban local body and power sector reforms. The final 0.5% in increased borrowing limit will be unlocked if targets are met in three of the four outlined areas.

The central government had granted permission to states to raise the unconditional 0.5%, or an additional Rs 1.06 lakh crore, from the market in June.

The additional borrowing will help states to tide over the financial stress stemmed from the Covid-19 pandemic. Besides, extra borrowing will help states that haven’t received any amount as goods and services tax compensation in the ongoing fiscal.