State gets nod for additional borrowing up to ₹2,655 crore
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It will help A.P. in pushing its capital expenditure further
Cash-strapped Andhra Pradesh is among the 11 States in the country that have been given permission for additional open market borrowing of ₹15,721 crore. The State has been given the nod for additional borrowing up to ₹2,655 crore.
The additional open market borrowing permission granted is equivalent to 0.25% of their Gross State Domestic Product (GSDP). Additional financial resources thus made available would help the States in pushing their capital expenditure further, said a PIB release.
The incentive is given for these States after achieving the target set by the Ministry of Finance for the capital expenditure in the first quarter of 2021-22. The other States are Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand.
Out of the net borrowing ceiling (NBC) of 4% of GSDP for the States for 2021-22, 0.50% of GSDP was earmarked for incremental capital expenditure to be incurred by the States during 2021-22. The target for incremental capital expenditure for each State to qualify for this incremental borrowing was fixed by the Department of Expenditure.
To become eligible for incremental borrowing, States are required to achieve at least 15% of the target set for 2021-22 by the end of first quarter of 2021-22, 45% by the end of second quarter, 70% by the end of third quarter and 100% by March 31, 2022.
The next review of capital expenditure of States woud be undertaken by the Department of Expenditure in December 2021. In this round, capital expenditure achieved by the States till September 30, 2021 would be assessed. Third review woud be done in March 2022 on the basis of capital expenditure incurred by the State during the first three quarters of the year 2021-22. The capital expenditure-linked borrowing ceiling of 0.50% of GDP woud be allowed to those States who achieve actual capital expenditure of at least 45% of the target by September 30, 2021 or 70% of the target by December 31, 2021.
There would be a final review of actual capital expenditure by the States in June 2022. Any shortfall/deficiency in actual capital expenditure for the year 2021-22 by the State in comparison with the targeted capital expenditure for the year 2021-22, would be adjusted from the borrowing ceiling of the State for the year 2022-23.
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