STATES borrowing limit is increased, FM Sitharaman

GOVERNMENT has announced the borrowing limit of states will be hiked from 3 percent of gross state domestic product (GSDP) to 5 percent in 2020-21  to provide them an extra of Rs 4.28 trillion, says  Finance Minister Nirmala Sitharaman. The Centre devolved Rs 46,038 crore of taxes in April to states even though actual revenue shows an unprecedented decline from Budget Estimates,  She said while briefing media on the fifth trance of the massive stimulus package announced by PM Narendra Modi to improve the coronavirus affected economy.  Revenue deficit grants of Rs 12,390 crore were given to states on time in April and May despite the Centre’s stressed resources, she said. Advance release of the State Disaster Relief Fund (SDRF) of Rs 11,092 crore happened in the first week of April, she said adding that a release of over Rs 4,113 crore from the health ministry for direct anti-COVID activities was also released. t the Centre’s request, the Reserve Bank of India (RBI) has increased Ways and Means Advance limits of states by 60 percent. Also, the number of days state can be in continuous overdraft has been increased from 14 days to 21 days and the number of days state can be in overdraft in a quarter has been increased from 32 to 50 days. State net borrowing ceiling for 2020-21 is Rs 6.41 trillion (3 percent of gross state domestic product). States have so far borrowed only 14 percent of the limit authorised. 86 per cent of the authorised borrowing remains unutilized.

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