VIJAYAWADA: With the State government promulgating an Ordinance to increase the Fiscal Responsibility and Budget Management (FRBM) limit to 5 per cent from 3 per cent, Andhra Pradesh becomes eligible to take an additional Rs 20,000 crore loan. With COVID-19 pandemic paralysing normal life and crippling the economy, the Centre has increased the borrowing limit of the State governments up to 5 per cent of the Gross State Domestic Product (GSDP).
Subsequently, the Andhra Pradesh government promulgated the Andhra Pradesh Fiscal Responsibility and Budget Management (Amendment) Ordinance, 2020, on Sunday night. The Centre made the announcement following a demand from various States that their market borrowing limit be enhanced to meet the expenditure contingencies of the COVID-19 pandemic amid a glaring revenue deficit.
The Centre has also linked a considerable part of the extra borrowing liberty to certain reforms such as ease of doing business.Speaking to TNIE, a retired IAS officer, who was at the helm of the Finance department during his tenure, felt that the relaxation of FRBM limit would provide a great relief for the cash-strapped State government.
As per the provision to draw 3 per cent out of the GSDP as loan, the Andhra Pradesh government was allowed to borrow Rs 33,000 crore and now with the Centre increasing the limit to 5 per cent, Andhra Pradesh can borrow loans to the tune of Rs 20,000 crore to Rs 22,000 crore a year, the official said.