Reform-linked borrowing worth Rs 23,523 Cr gets nod for 9 states

The Centre has granted permission of reform-linked borrowing worth Rs 23,523 crore to nine states.

A Finance Ministry statement said that so far nine states have successfully completed reforms in PDS and implemented One Nation One Ration System — Andhra Pradesh, Goa, Haryana, Karnataka, Kerala, Telangana, Tripura and Uttar Pradesh.

“On completion of reforms, additional borrowing permission of Rs 23,523 crore has been issued to them,” it said.

In view of the challenges posed by the COVID 19 pandemic for mobilisation of financial resources, the Government of India has taken multiple measures to avail funds to states. These include grant of additional borrowing permission of 2 per cent of the Gross State Domestic Product (GSDP) in the year 2020-21.

This has enabled the states to mobilise additional financial resources to fight the pandemic and maintain the standards of service delivery to the public. However, to ensure long-term debt sustainability and prevent any adverse impact on future, a part of the additional borrowing was linked to the States carrying out reforms in the sectors critical for service delivery to the citizens.

One of the sectors identified for reforms is the Public Distribution System. Out of the additional borrowing limit of 2 per cent of GSDP, 0.25 per cent is linked to implementation of “One Nation One Ration Card system”.

This was aimed to ensure that the beneficiaries under the National Food Security Act (NFSA) and other welfare schemes, especially the migrant workers and their families, get ration from any Fair Price Shop (FPS) across the country.

Department of Food and Public Distribution in the Ministry of Consumer Affairs, Food and Public Distribution is the nodal department to certify that a state has met the conditions stipulated for this reform. Further, to become eligible for additional borrowing, the states have to complete the reforms by December 31, 2020.

It is expected that many more states will complete this reform before the stipulated date, as per the ministry.

In addition to the One Nation One Ration Card, other reforms specified as a precondition to avail additional borrowing are ease of doing business reform, urban local body or utility reforms and power sector reforms.