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COVID-19 fight | More money for states as Centre increases borrowing limit

Finance Minister Nirmala Sitharaman gives the finer details of the Rs 20 lakh crore stimulus announced by Prime Minister Narendra Modi earlier this week.

May 17, 2020 / 02:45 PM IST

Detailing the measures for easing economic hardships triggered by the coronavirus pandemic, Finance Minister Nirmala Sitharaman on May 17 announced the last tranche of economic package.

The borrowing limit for states has been hiked to 5 percent from 3 percent for current financial year ending March 31, 2021.

Underlining initiatives taken to support state governments, the FM said that despite a sharp decline in revenues, Centre has disbursed Rs 46,038 crore to states in April.

"Additionally, Revenue Deficit Grants of Rs 12,390 crore was given on time in April and May, despite Centre's stressed resources," Sitharaman said, adding that Centre has released State Disaster Response Force funds to the tune of Rs 11,092 crore in the first week of April.

"Health Ministry has released over Rs. 4,113 crore for direct anti-COVID-19 activities," the FM added.

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At Centre's request, the RBI has increased Ways and Mans Advance limit of the state governments by 60 percent, she added.

The government has also increased the number of days states can be in continuous overdraft from 14 days to 21 days. Additionally, in a quarter, states can be in overdraft for 50 days from earlier 32 days.

Follow FM Nirmala Sitharaman's announcements here on our LIVE blog

Finance Minister on May 15 outlined the fifth tranche of the contours of India’s Rs 20 lakh crore fiscal stimulus announced by Prime Minister Narendra Modi.

So far, the steps announced by the government have focussed on MSMEs, PSU banks, agriculture, the welfare of the poor and structural reforms in eight sectors, including coal, minerals, airports.

On May 15, Sitharaman announced Rs 1 lakh crore for a farm infrastructure fund and a Rs 10,000 crore scheme for micro food enterprises. Moreover, she proposed amendments to the Essential Commodities Act to enable better pricing for farmers.

The nationwide lockdown enforced on March 25 has brought most economic activities in the country to a standstill.

Follow Moneycontrol's full coverage on Coronavirus here

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first published: May 17, 2020 01:28 pm