HYDERABAD: The Finance Ministry accorded permission to Telangana to raise additional open market borrowings to the tune of Rs 5,392 crore, which is equivalent to 0.5% of the Gross State Domestic Produce (GSDP). According to the Finance Ministry’s statement issued on Friday, seven states including Chhattisgarh, Kerala, Madhya Pradesh, Meghalaya, Punjab, Rajasthan and Telangana have achieved the target set by the Ministry of Finance for the capital expenditure up to second quarter of 2021-22. As an incentive, these States were granted permission by the Department of Expenditure on Friday to borrow an additional amount of amount of Rs 16,691 crore. The additional financial resources thus made available will help States in pushing their capital expenditure further.
Capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth. Accordingly, out of the net borrowing ceiling (NBC) of four per cent of GSDP for the States for 2021-22, borrowings up to 0.50 per cent of GSDP were earmarked for incremental capital expenditure to be incurred by the States during 2021-22.