PM Modi says, Indian states were able to borrow significantly more in 2020-21 even though financial crunch was seen across world

New Delhi, June 22

Prime Minister Narendra Modi today said Indian states were able to borrow significantly more in 2020-21 even though a financial crunch was seen across the world. In a blog post in LinkedIn, Mr Modi said states were able to raise an extra Rs 1.06 lakh crore in 2020-21. He said this significant increase in availability of resources was made possible by an approach of Centre-State bhagidari.
 
In May 2020, as part of the Aatmanirbhar Bharat package, the Government announced that states would be allowed enhanced borrowing for 2020-21. Mr Modi said an extra 2 per cent of GSDP was allowed, of which one per cent was made conditional on the implementation of certain economic reforms.

He said this was a nudge, incentivising the states to adopt progressive policies to avail additional funds. He added that the results of this exercise are not only encouraging but also run contrary to the notion that there are limited takers for sound economic policies.  
 
The Prime Minister said the four reforms to which additional borrowings were linked had two characteristics. Firstly, each of the reforms was linked to improving the Ease of Living to the public and particularly the poor, the vulnerable, and the middle class. Secondly, they also promoted fiscal sustainability.

Mr Modi said the first reform under the ‘One Nation One Ration Card’ policy required State Governments to ensure that all ration cards in the State under the National Food Security Act were seeded with the Aadhaar number of all family members and that all Fair Price Shops had Electronic Point of Sale devices. He added that the second reform was aimed at improving ease of doing business. It required states to ensure that renewal of business-related licences under seven Acts is made automatic, online and non-discretionary on mere payment of fees.
 
The Prime Minister said the third reform required states to notify floor rates of property tax and of water and sewerage charges, in consonance with stamp duty guideline values for property transactions and current costs respectively, in urban areas. The fourth reform was introduction of Direct Benefit Transfer in lieu of free electricity supply to farmers.
 
Overall, 23 states availed of additional borrowings of Rs 1.06 lakh crore out of a potential of Rs 2.14 lakh crore. As a result, the aggregate borrowing permission granted to states for 2020-21 was 4.5 per cent of the initially estimated GSDP.