K'taka allowed additional market borrowing post-reforms

Karnataka carries out ease of doing business reforms, granted permission for additional market borrowing

The other states, which have been granted permission to raise resources from market are Andhra Pradesh, Tamil Nadu, Telangana and Madhya Pradesh

Amid the Covid-19 pandemic, the Centre in May enhanced the borrowing limit of the states by 2% of their GSDP. Half of this special dispensation was linked to undertaking citizen-centric reforms by the states. Representative image. Credit: iStock

The Centre on Sunday gave permission to five states, including Karnataka, to borrow an additional Rs 16,728 crore cumulatively through open market after they completed reforms in ease of doing business.

The other states, which have been granted permission to raise resources from the market are Andhra Pradesh, Tamil Nadu, Telangana and Madhya Pradesh.

Karnataka can borrow an additional Rs 4,509 crore, the finance ministry said.

The Centre had, in May, decided to link grant of additional borrowing permissions to states which undertake reforms to facilitate ease of doing business. These reforms included doing away with renewal of registration certificates/approvals/licences obtained by businesses for various activities under Shops & Establishment Act, Contracts Labour (Regulation and Abolition) Act, 1970, Factories Act, 1948, Legal Metrology Act, Inter State Migrant Workmen (RE&CS) Act, 1979, Drug Manufacturing/ Selling/ Storage License Trade License issued by the Municipal Corporations among others.

Improvements in the ease of doing business will enable faster future growth of the state economy.

Amid the Covid-19 pandemic, the Centre in May enhanced the borrowing limit of the states by 2% of their GSDP. Half of this special dispensation was linked to undertaking citizen-centric reforms by the states.

The four citizen-centric areas for reforms identified were -- implementation of one nation one ration card system, ease of doing business reform, urban local body/ utility reforms and  power sector reforms.

So far 10 states have implemented the one nation one ration card system, five states have done ease of doing business reforms, and two states have done local body reforms.

Besides additional borrowing permissions, the states completing three out of the four reforms are entitled to get additional financial assistance under the “scheme for financial assistance to states for capital expenditure”. Under the Scheme, the states will be allocated Rs 2,000 cumulatively.

To facilitate more states to undertake the reforms and avail additional borrowings, the finance ministry recently extended the deadline for the states to complete citizen centric reforms in various sectors to February 15, 2021.