New Delhi (NVI): The Ministry of Finance has extended the deadline for the states to complete citizen centric reforms till February 15, to be get additional borrowing permission.
“Now the states will be eligible for reform linked benefits if the finance ministry receives a recommendation from the nodal ministry concerned about the implementation of the reform by February 15, 2021,” the Finance Ministry in a statement.
It added that, the government has identified four critical areas for reforms by the states, namely, implementation of One Nation One Ration Card system, ease of doing business reform, urban local body/ utility reforms and power sector reforms.
The Department of Expenditure of the Finance Ministry said that, those states which successfully complete the reforms are eligible to get two main benefits.
The first benefit states get is the facility of additional borrowing equivalent to 0.25 percent of their Gross States Domestic Product (GSDP) for completing each reform. Under this facility, additional borrowings of up to Rs.2.14 lakh crore is available to the States on completion of all the four reforms.
In order to meet the challenges posed by the COVID-19 pandemic, the government had decided to raise the borrowing limit of the states by 2 percent of their GSDP in May, the statement stated.
“This was aimed at enabling the states to mobilise additional financial resources of up to Rs 4.27 lakh crore. The purpose was to motivate the States to carry out reforms in various citizen centric areas,” it added.
Moreover, the second benefit available to the states completing three out of the four reforms is additional funds assistance under the “Scheme for Financial Assistance to States for Capital Expenditure”.
Under the scheme, an amount of Rs 2,000 crore is earmarked for the States that will complete at least three out of the four stipulated reforms. The scheme was announced by the Finance Minister Niramala Sitharaman on October 12 as part of AatmaNirbhar Bharat Package 2.0.
It is also aimed at boosting capital expenditure by State Governments who are facing difficult financial environment this year due to the shortfall in tax revenue arising from the COVID-19 pandemic. An amount of Rs 12,000 crore has been earmarked by the Government of India under this scheme.
Furthermore, the ministry informed that, so far, nine states have implemented the One Nation One Ration Card System, 4 States have completed the ease of doing business reforms and one State has done the urban local body or utility reforms.
-RJV
