The Centre on Friday permitted Uttar Pradesh and Andhra Pradesh to go for an additional borrowing of Rs 7,106 crore, to meet their expenditure requirements amid falling revenues due to the COVID-19 crisis.
“The Ministry of Finance has granted additional borrowing permission to two more states, Uttar Pradesh and Andhra Pradesh, for successfully undertaking reforms in the public distribution system (PDS) and ease of doing business,” an official statement said.
This will make an additional amount of Rs 7,106 crore available to these states, it added.
Uttar Pradesh has become sixth state to complete the reform process in PDS to implement the One Nation-One Ration Card system.
This has made the state eligible to raise an amount of Rs 4,581 crore through open market borrowings (OMBs).
Andhra Pradesh has became the first state in the country to successfully undertake ease of doing business reforms and has thus become eligible to raise an additional amount of Rs 2,525 crore through open market borrowings.
Earlier, Andhra Pradesh had also completed PDS reforms to enable the One Nation-One Ration Card system.
Last week, five states Andhra Pradesh, Telangana, Goa, Karnataka and Tripura received the finance ministry’s nod for additional Rs 9,913 crore borrowing, after meeting the reform condition of the implementation of One Nation-One Ration Card system.
In view of the COVID-19 pandemic, the central government in May 2020 allowed an additional borrowing limit of up to 2 per cent of gross state domestic product (GSDP) to the states for the year 2020-21. This made an amount up to Rs 4,27,302 crore available to the states.
One per cent of this is subject to the implementation of four specific state-level reforms, where weightage of each reform is 0.25 per cent of GSDP. These reforms include implementation of the One Nation-One Ration Card system, ease of doing business reform, urban local body or utility reforms, and power sector reforms.