The finance ministry has prolonged the deadline to February 15, 2021, for the states to finish citizen-centric reforms in numerous sectors, to be able to turn out to be eligible for availing extra borrowing. The authorities has recognized 4 important areas for reforms by the states, specifically, the implementation of 1 nation, one ration card system, the benefit of doing enterprise reform, city native physique/ utility reforms, and energy sector reforms. The expenditure division of the finance ministry stated in an announcement that these states which efficiently full the reforms are eligible to get two foremost advantages:
1. Additional borrowing equal to 0.25 per cent of their gross states home product for finishing all reforms
- The states which implement all reforms are eligible for an extra borrowing equal to 0.25 per cent of their gross states home product (GSDP) for finishing every reform. Under this facility, extra borrowings of as much as Rs.2.14 lakh crore is accessible on completion of all 4 reforms.
- In order to deal with the challenges after the COVID-19 pandemic, the federal government had determined to boost the borrowing restrict of the states by 2 per cent of their GSDP in May 2020. This was finished to allow states to mobilise an extra monetary useful resource of as much as Rs.4.27 lakh crore. The objective was to encourage the states to implement the citizen-centric reforms.
2. Scheme for Financial Assistance to States for Capital Expenditure for finishing three out of 4 reforms
- The second profit accessible to states finishing three out of the 4 reforms is extra funds help underneath the ‘Scheme for Financial Assistance to States for Capital Expenditure’. Under the scheme, an quantity of Rs 2,000 crore is supposed for states that can full not less than three out of the 4 reforms.
- This scheme was introduced by Finance Minister Nirmala Sitharaman on October 12, 2020, as a part of Aatmanirbhar Bharat Package 2.0. It is aimed toward boosting capital expenditure by state governments, going through a shortfall in tax income on account of the COVID-19 pandemic. An quantity of Rs.12,000 crore has been put aside for states by the central authorities underneath this scheme.
According to the finance ministry, 9 states have carried out the one nation, one ration card system, 4 states have accomplished the benefit of doing enterprise reforms and one state has accomplished the city native physique/utility reforms. Additional borrowing permission of Rs 40,251 crore has been granted to all of those states.