Government Allows Additional Borrowing Of ₹ 19,459 Crore For Six States


Rajasthan has become the sixth state in the country to undertake and successfully complete the ease of doing business reform stipulated by the Department of Expenditure of Ministry of Finance, and has become eligible for additional borrowing of ₹ 2,731 crore, through open market borrowings. In a recent statement issued by the Ministry of Finance, Rajasthan has now joined the five other states namely, Karnataka, Andhra Pradesh, Tamil Nadu, Madhya Pradesh, and Telangana, which have completed the reforms. Hence, upon completion of reforms facilitating the ease of doing business, the six states have been granted additional borrowing permission of Rs.19,459 crore.

The ease of doing business is a significant indicator of the investment-friendly business climate in the country. The improvements in the ease of doing business will enable faster future growth of the state economy. In May 2020, the government had decided to link the grant of additional borrowing permissions to the states which complete the reforms to facilitate ease of doing business. The reforms stipulated in this category are as follows:

  • The completion of the first assessment of district-level business reform action plan
  • The elimination of the requirements of renewal of registration certificates or licenses obtained by businesses under various acts.
  • The implementation of computerized central random inspection system under the acts wherein allocation of inspectors is done centrally, the same inspector is not assigned to the same unit in subsequent years, prior inspection notice is provided to the business owner, and the inspection report is uploaded within a period of 48 hours of the inspection.            
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On May 17, 2020, in order to tackle the resource demand challenges amid the COVID-19 crisis, the government had enhanced the borrowing limit of the states by two percent of their gross state domestic product (GSDP). 50 per cent or half of this was linked to undertaking the citizen centric reforms by the states.