To become eligible for incremental borrowing, states were required to meet at least 15% of the target set for FY22 by the end of June quarter, 45% by the end of September quarter, 70% by the end of December quarter and 100% by the March quarter of FY22
NEW DELHI: The Centre has allowed 11 states to borrow an additional Rs15,721 crore from the market after they achieved the capital expenditure target, set by the finance ministry, for June quarter of the current fiscal.
The additional open market borrowing permission granted is equivalent to 0.25% of their Gross State Domestic Product (GSDP). “Additional financial resources thus made available will help the states in pushing their capital expenditure further. The capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth," the finance ministry said in a statement.
Of the net borrowing ceiling of 4% of GSDP for states for FY22, about 0.50% of GSDP was earmarked for incremental capital expenditure to be incurred by states during FY22. The target for incremental capital expenditure for each state to qualify for this incremental borrowing was fixed by the Department of Expenditure.
To become eligible for incremental borrowing, states were required to achieve at least 15% of the target set for FY22 by the end of June quarter, 45% by the end of September quarter, 70% by the end of December quarter and 100% by March quarter of FY22.
The next review of capital expenditure of states will be undertaken by the expenditure department in December and will assess capex undertaken by the states till 30 September. The third review will be done March 2022 to assess capital expenditure incurred by states during the first three quarters of FY22.
“There would be a final review of actual capital expenditure by the States in the month of June, 2022. Any shortfall/deficiency in actual capital expenditure for the year 2021-22 by the State in comparison with the targeted capital expenditure for the year 2021-22, will be adjusted from the borrowing ceiling of the state for the year 2022-23," the finance ministry said.