Business News/ News / India/  Govt allows five states to borrow more for power sector reforms

New Delhi: The finance ministry on Friday permitted reforms-linked additional borrowing for five states, including Karnataka, Rajasthan, Uttarakhand, Goa, and Bihar, after they met the power sector reforms target of the Centre.

The reforms include cutting aggregate technical and commercial losses and bridging the average cost of supply and average revenue realization gap, stipulated by the department of expenditure of the ministry of finance.

Besides, Andhra Pradesh and Madhya Pradesh, which have undertaken the third phase of reforms for the power sector, including direct benefit transfer of electricity subsidy to farmers, were given additional borrowing permission of a total of 2,938 crore, or 0.15% of their gross state domestic product (GSDP). The seven states have so far been granted additional borrowing permission of a total of 5,032 crore.

In view of the financing requirement to meet the challenges posed by covid-19, the Centre on 17 May 2020 had enhanced the borrowing limit of states by 2 percentage points of their GSDP to 5%. Half of this special dispensation was linked to undertaking four citizen-centric reforms, such as implementation of the One Nation One Ration Card system, ease of doing business, urban and local body or utility reforms, and power sector reforms.

So far, 21 states have carried out at least one reform initiative and were allowed to raise an aggregate amount of 91,667 crore under the reform-linked additional borrowing scheme.

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Updated: 19 Feb 2021, 10:24 PM IST
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