HYDERABAD: Though the Centre on Sunday raised the Fiscal Responsibility and Budget Management (FRBM) ceiling of the Gross State Domestic Product (GSDP) to five per cent from the present three, with some preconditions, it would, nonetheless, help the State go in for an additional loan of about Rs 14,450 crore during this financial year.
In the 2020-21 State Budget, the estimated market borrowings are Rs 34,000 crore at 3.5 per cent of GSDP. The GSDP of the State is around Rs 9.69 lakh crore. If the State fulfils the conditions laid down by the Union Finance Minister, it is expected to get an additional loan of around Rs 14,450 crore. Thus, the State can raise a total loan of around Rs 48,450 crore in 2020-21.
The Centre’s announcement means that the increased borrowing space of 0.5 per cent is unconditional. It also means, there are no conditions for States to raise loans up to 3.5 per cent under FRBM Act. In the remaining 1.5 per cent, one per cent can be raised in four tranches of 0.25 per cent.
However, the extra one per cent loan is linked to ‘One Nation, One Ration’, revenues of urban local bodies, power distribution and ease of doing business reforms. The States will get eligibility for the last 0.5 per cent loan, if they fulfil at least three out of four above conditions set by the Finance Ministry. Telangana as a forward State can fulfil three conditions, if not reforms in power distribution.