Government Allows Additional Borrowing Of Rs 28,183 Crore For Twelve States

Ease of Doing Business: Twelve states have been granted additional borrowing permission
Ease of Doing Business: Twelve states have been granted additional borrowing permission

Ease of Doing Business: Four more states have undertaken the stipulated reforms under ease of doing business, allowing them to avail additional financial borrowings worth Rs 5,034 crore, said the Ministry of Finance in a statement on Saturday, February 6. This has taken the total number of states that have completed the ease of doing business reforms to 12, with the government allowing for additional borrowing permission of Rs 28,183 crore, so far. The four states which have recently completed the reforms are Assam, Haryana, Himachal Pradesh, and Punjab. (Also ReadMadhya Pradesh Becomes First State To Get Additional Funds For Capital Projects )

According to an official statement by the Finance Ministry, Assam, Haryana, Punjab, and Himachal Pradesh completed reforms stipulated by the Department of Expenditure, and have become eligible to mobilise additional financial resources and have been granted permission to raise additional Rs 5,034 crore through open market borrowings. As part of the additional borrowing among these states, Haryana received maximum borrowing permission of Rs 2,146 crore, followed by Punjab Rs 1,516 crore, followed by Assam Rs 934 crore, and Himachal Pradesh with Rs 438 crore.

Earlier, Andhra Pradesh, Karnataka, Kerala, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, and Telangana also reported the completion of the reform, which was confirmed by the Department for Promotion of Industry and Internal Trade (DPIIT).

The ease of doing business indicator reflects the investment-friendly business climate, according to the Finance Ministry. The improvement in the area enables faster growth of the state economy. In May 2020, the government had decided to link the grant of additional borrowing permissions to states that will undertake the reforms to facilitate ease of doing business. The reforms under Ease of Doing Business are as follows:

  • The completion of the first assessment of the district-level business reform action plan
  • The elimination of the requirements of renewal of registration certificates
  • The implementation of a computerized central random inspection system under the Acts wherein the allocation of inspectors is done centrally. The same inspector is not assigned to the same unit in the subsequent years, a prior inspection notice is provided to the business owner, and the inspection report is uploaded within a duration of 48 hours of the inspection.            

In May 2020, in order to handle the resource demand challenge amid the COVID-19 crisis, the government had increased the borrowing limit of the states by two percent of their gross state domestic product (GSDP). 50 per cent or half of this dispensation was linked to undertaking the citizen-centric reforms by the states

The four citizen-centric areas for reforms identified were as follows:

  • The implementation of the One Nation One Ration Card System
  • Ease of doing business reform
  • Urban local body or utility reforms
  • Power sector reforms

Meanwhile, Madhya Pradesh became the first state to complete three out of four citizen-centric reforms and received additional funds for capital projects. The Department of Expenditure allocated an additional Rs.660 crore to Madhya Pradesh for capital expenditure. 

So far, a total of 17 States have carried out at least one of the four stipulated reforms and have been granted permission for reform linked borrowing. Out of these, a total of 12 States have implemented the one nation one ration card system, 12 states have carried out ease of doing business reforms, five states have undertaken local body reforms. and two states have carried out power sector reforms. The total reform linked additional borrowing permission issued so far to the states stands at Rs.­­­74,773 crore, said the Finance Ministry.