Finally, Telangana Chief Minister K. Chandrasekhara Rao’s demand has been heeded and the Centre has increased the Fiscal Responsibility and Budget Management (FRMB) Act permit to the states. The relaxation of the norms will help the state borrow more loans so that it can take up development schemes.
While speaking about Lockdown 4.0, Prime Minister Narendra Modi declared Rs 20 lakh crore package under the Atma Nirbhar Bharat Abhiyan which would act as a stimulus scheme for various sectors that faced the brunt of the shutdown.
Detailing about the package, Union finance minister Nirmala Sitharaman said that the loan limit for states was increased to 5 per cent from the present 3 per cent of GSDP. She also made it clear that there would be no conditions to increase the loan limit to 3,5 per cent from the present 3 per cent.
However, there will be some conditions applicable to increase the loan limit from 3.5 per cent to 5 per cent. This relaxation will allow states to borrow an additional Rs 4.28 lakh crore.
She said that the Centre would also extend all the necessary help to the states to tode over the Covid-19 crisis. She added that SDRF funds to the tune of Rs 11,092 crore have already been kept available for the states.
This apart, the states will also be provided the facility to take overdrafts to pay the salaries of government employees. The time limit to draw the overdraft has also been extended to 52 days. She also said that allocation of Rs 46,000 crore was done as part of tax income to the states.
When the National Institution for India (NITI) Aayog members called up KCR recently, he told them that the FRBM guidelines for raising funds through borrowings for revenue surplus states, should be on par with the Centre. Rao told them that this relaxation will enable the state invest in improvement of infrastructure to bring momentum to economic growth. He demanded that Telangana should be allowed to borrow loans up to 3.49 per cent of GSDP against the existing limit of less than 2.7 per cent.
In the wake of the Covid-19 lockdown, the economy of many countries was hit badly and India is no exception. Even before India declared lockdown, Telangana CM KCR had complained of the state’s economy in a very bad state due to recession, declaring it in the Budget session.
