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Finance Ministry allows Madhya Pradesh to raise Rs 1,423 crore additional fund through market borrowing

Successful implementation of the reform has made the state eligible to mobilise additional financial resources equivalent to 0.15 per cent of its Gross State Domestic Product (GSDP).

January 19, 2021 / 05:27 PM IST
Union Finance Ministry. (PC-PTI)

Union Finance Ministry. (PC-PTI)

The Finance Ministry on Tuesday said Madhya Pradesh has been permitted to raise additional Rs 1,423 crore through market borrowing after the state implemented power sector reforms. In a statement, the ministry said Madhya Pradesh has started Direct Benefit Transfer (DBT) of electricity subsidy to farmers in one district of the state with effect from December 2020. Thus, it has successfully implemented one of the three stipulated reforms in the power sector.

Successful implementation of the reform has made the state eligible to mobilise additional financial resources equivalent to 0.15 per cent of its Gross State Domestic Product (GSDP). "Accordingly, the Department of Expenditure has granted permission to the State to mobilise additional financial resources of Rs 1,423 crore through Open Market Borrowings. This has provided the much needed additional financial resources to the State to fight COVID-19 pandemic," the statement said.

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The Centre had in May last year enhanced the borrowing limit of the states by 2 per cent of their GSDP. Half of this special dispensation was linked to undertaking citizen-centric reforms by the states. The states get permission to raise additional funds equivalent to 0.25 per cent of GSDP on completion of reforms in each sector.

The four citizen-centric areas identified for reforms were (a) Implementation of One Nation One Ration Card System, (b) Ease of doing business reform, (c) Urban Local body/ utility reforms and (d) Power Sector reforms. Till now, 14 states have carried out at least one of the four stipulated reforms and have been granted reform linked borrowing permissions.


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Out of these, 11 states have implemented the One Nation One Ration Card System, 8 states have done ease of doing business reforms, 4 states have done local body reforms and Madhya Pradesh has implemented power sector reforms. Total reform linked additional borrowing permission issued so far to the states stands at Rs 62,762 crore, the statement said.
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