Nirmala Sitharaman says off budget borrowings will be termed state's debts
The Department of Expenditure of the Finance Ministry would exercise the powers to approve borrowings by States under Article 293 (3) of the Constitution of India.
Published: 26th July 2022 05:34 AM | Last Updated: 26th July 2022 05:34 AM | A+A A-
HYDERABAD: It is now official. Union Finance Minister Nirmala Sitharaman has made it clear that if the interest or principal loan amount of any SPV or State Public Sector Undertaking is serviced from the State Budget, it would be considered as borrowings made by the State government itself. The cumulative debt burden on Telangana now is a whopping Rs 3,12,191 crore (2022 BE).
Replying to a question in Lok Sabha on Monday, the Union Finance Minister said: “Instances of borrowings by certain State Public Sector companies, Special Purpose vehicles (SPVs) and other equivalent instruments, where principal and/or interest are to be serviced out of the State Budgets, had come to the notice of the Ministry of Finance.
Considering the effect of bypassing the Net Borrowing Capacity (NBC) of the States by such borrowings, it was decided and communicated to the States in March 2022 that borrowings by State Public Sector companies/corporations, Special Purpose Vehicles (SPVs), and other equivalent instruments, where principal and/or interest are to be serviced out of the State Budgets and/or by assignment of taxes/ cess or any other State’s revenue, shall be considered as borrowings made by the State itself for the purpose of issuing the consent under Article 293(3) of the Constitution of India”.
The Department of Expenditure of the Finance Ministry would exercise the powers to approve borrowings by States under Article 293 (3) of the Constitution of India. “The normal Net Borrowing Ceiling (NBC) of each State is fixed by the Union government in the beginning of each financial year. Adjustments for the over-borrowing by States during previous years, if any, are made in the borrowing limits of subsequent year,” the Finance Minister said. She also furnished the state-wise details of outstanding borrowings.
BORROWING LIMIT CUT
The Ministry of Finance had cut the borrowing limit of the State for the current financial year by Rs 19,000 crore, stating that the State government was servicing the loans taken for Mission Bhagiratha, Kaleshwaram and other corporations from the State Budget.