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Finance Ministry allows 5 states to raise additional financial resources of Rs 9,913 crore through OMBs
Sep-25-2020

The Department of Expenditure, Ministry of Finance, has granted permission to raise additional financial resources of Rs 9,913 crore to 5 States through Open Market Borrowings (OMBs). These States are Andhra Pradesh, Telangana, Goa, Karnataka and Tripura. This permission has been accorded after these States successfully met the reform condition of implementation of One Nation One Ration Card System.

As per the notification released by Ministry of Finance, Karnataka can now borrow additional Rs 4,509 crore, while Andhra Pradesh can raise Rs 2,525 crore, followed by Telangana at Rs 2,508 crore. Goa has been allowed to mop up Rs 223 crore from markets and Tripura Rs 148 crore. In view of the unprecedented COVID-19 pandemic the Central Government had in May, 2020 allowed additional borrowing limit of up to 2 percent 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 percent of this is subject to implementation of four specific State level reforms, where weightage of each reform is 0.25 percent of GSDP. These reforms are implementation of one nation one ration card system; ease of doing business reform; urban local body/ utility reforms; and power sector reforms. The remaining additional borrowing limit of 1 percent was to be released in two instalments of 0.50 percent each - first immediately to all the States as untied, and the second on undertaking at least 3 out of the above mentioned reforms. The Government of India has already granted permission to States to raise the first 0.50 percent as OMB in June, 2020. This made an additional amount of Rs 1,06,830 crore available to the States.

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