The Cabinet on Thursday approved a proposal allowing states to borrow an extra 0.5% of gross state domestic product (GSDP). This dispensation will allow states to borrow approximately Rs 21,000 crore more in 2009-10.
The Budget 2009-10 has announced this leeway to states to enable them battle the economic slowdown. A single state can now borrow up to 4% of its GSDP in the current fiscal.
The Cabinet approved changes in the debt consolidation and relief facility (DCRF) guidelines, which describe the annual deficit reduction targets for states. States will not lose the DCRF benefits? such as relief on interest payment?provided they comply with this new fiscal deficit target.
The finance ministry would ask the 13th Finance Commission, which oversees the DCRF and advises on Centre-state fiscal relations, to make the required changes. The government had earlier relaxed the fiscal deficit target of states from 3% in 2008-09 to 3.5%. The state may need to amend their fiscal responsibility legislations or FRL.
In a separate decision, the Cabinet Committee on Infrastructure approved development of four multi-purpose cargo berths at Kandla Port Trust in Gujarat at an estimated cost of Rs 755.50 crore. The will enable Kandla port to handle additional quantity of 8 million tonne dry cargo per annum.
The Cabinet also approved a proposal to amend the National Institutes of Technology Act to declare NITs as institutes of national importance and enable them award degrees. The proposed amendment would also incorporate the Indian Institutes of Science Education and Research (IISER) in the ambit of the NIT Act. It will also give representation to nearby premier central institutions in the boards of governors of the NITs.
The government also decided to set up a special fund in 18 missions to meet emergency expenses on providing food, shelter, legal aid and other welfare activities for them. The proposed Indian Community Welfare Fund (ICWF) would get a budgetary support of Rs 4.8 crore for three years. It will raise resources from charging cess on consular services and donations from the local Indian community.
The Cabinet deferred a proposal to increase reservation for women to 50% in panchayats, information and broadcasting minister Ambika Soni said. The proposal was to amend Article 243(d) of the Constitution, which provides for one-third reservation for women in panchayats, and increase it to 50%.