Govt allows five states including Karnataka to raise funds via Open Market Borrowings

The government on Thursday allowed five states including Karnataka to raise additional financial resources of Rs 9,913 crore through Open Market Borrowings (OMBs) to meet additional expenses arising due to the Covid-19 pandemic.

The Ministry also permitted four other states - Andhra Pradesh, Telangana, Goa, and Tripura to raise additional financial resources through the open market.

The Department of Expenditure under the Ministry of Finance has granted permission after these states successfully met the reform condition of implementation of the One Nation One Ration Card system. Among the states, Karnataka is allowed to borrow Rs 4,509 crore, while Andhra Pradesh is permitted to borrow Rs 2,525 crore. Telangana is allowed to borrow Rs 2,508 crore, followed by Goa Rs 223 crore and Tripura Rs 148 crore.

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"In view of the unprecedented Covid-19 pandemic, the Central Government had in May 2020 allowed additional borrowing limit of up to 2% 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," the statement said.

The four reforms are: implementation of One Nation One Ration Card system, ease of doing business reform, urban local body/ utility reform, and power sector reforms.

The remaining additional limit of 1% was to be released in two installments of 0.50% each. The first immediately to all the states untied, and the second on the undertaking at least 3 out of the four reforms. The government granted permission to states to raise the first 0.50% as OMB in June this year. This made an additional amount of Rs 1,06,830 crore available to the states.