Page 96 - economic_survey_2021-2022

70 Economic Survey 2021-22

Box 3: Measures taken by the Centre to support the States during 2021-22

The Central Government has taken consistent steps to impart unflinching support to the States in the
challenging times of the pandemic. These measures are as follows:

1. Enhanced limit of borrowing for the States

FY 2020-21: Under the Atma Nirbhar Bharat package, additional borrowing limit of up to
2 per cent of Gross State Domestic Product (GSDP) was allowed to the States for FY2020-21,
which was equivalent to ` 4.27 lakh crore. Of the additional 2 per cent borrowing allowed to the
States, the first instalment of 0.5 per cent borrowing was untied for all the states. The second part
amounting to 1 per cent of GSDP was subject to implementation of following four specific State
level reforms, where weightage of each reform is 0.25 per cent of GSDP:-

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

Another, 0.5 per cent of GSDP, which was earlier linked to the completion of at least 3 out of 4
above mentioned reforms, was made untied for States choosing Option 1 to meet the shortfall
arising out of GST implementation. 17 States implemented the One Nation One Ration Card
System, 20 States completed the stipulated reforms in the Ease of Doing Business, 11 States had
done local body reforms and 17 States carried out fully/partly Power Sector Reforms. Thus, for
the year 2020-21 total borrowing permission of `3,19, 939 crore was issued to States out of the
additional borrowing ceiling of 2 per cent allowed to States.

FY 2021-22: The net borrowing of the States for the year 2021-22 has been fixed at
` 8,46,922 crore at 4 per cent of GSDP of the States. Out of the net borrowing ceiling (NBC)
of 4 per cent of GSDP for the States for 2021-22, 0.50 per cent of GSDP was earmarked for the
incremental capital expenditure to be incurred by the States during 2021-22. For this, a target
for capital expenditure was fixed for each State. To become eligible for incremental borrowing,
States were required to achieve at least 15 per cent of the target set for 2021-22 by the end of
first quarter of 2021-22, 45 per cent by the end of second quarter, 70 per cent by the end of
third quarter and 100 per cent by 31 March 2022. As on 15 November 2021, a total additional
st
borrowing permission of ` 32,412 crore had been issued to the States for fulfilling quarterly
capital expenditure targets, of which ` 15,721 crore is enabled for 11 states for meeting the Q1
target and ` 16,691 crore has been given to 7 states for achieving the Q2 target.

2. Loan to States in lieu of GST Compensation shortfall

In order to meet the shortfall in Goods and Services Tax (GST) compensation to be paid to
States, the Government of India had set up a special borrowing window in the year 2020-21.
An amount of ` 1,10,208 crore was borrowed through this window by the Government of India
during 2020-21 on behalf of the States and UTs with legislative assembly, and was passed on
to the States/UTs as loan on back to back basis to help the States/UTs to meet the resource gap