Coronavirus impact: Fin Min allows states to borrow Rs 3.2 trn from market

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The on Wednesday allowed open market borrowing for states up to a cumulative Rs 3.2 trillion from the market between April-December. The move comes states demanded more funds to meet expenses in dealing with the pandemic.


In a letter to the RBI, the ministry said that the Centre has decided to permit states to raise open market borrowing on the basis of 50 per cent the Net Borrowing Ceiling fixed for the year 2020-21 for financing the states’ annual plan for the fiscal.



As per the letter by the Department of Expenditure to the RBI, 28 states have been allowed to borrow a cumulative Rs 3,20,481 crore from markets on an ad-hoc basis for the first nine months of the current fiscal.


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Accordingly, West Bengal can borrow Rs 20,362 crore, Maharashtra (Rs 46,182 crore), Uttar Pradesh (Rs 29,108 crore), Karnataka (Rs 27,054 crore), Gujarat (Rs 26,112 crore) and Rajasthan (Rs 16,387 crore).


is requested to make necessary arrangements in consultation with the state government to raise the open market borrowing,” the letter said. It also said that further consent for raising open market borrowing during April-December will be processed after receiving complete information from states.


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The Reserve Bank of India (RBI) on Tuesday permitted state governments and Union territories (UTs) greater flexibility for availing overdraft facilities with immediate effect till September 30. The facility will now be available for 21 days as against the earlier 14 days.


The development comes amid reports of working on another booster dose to give a leg-up to the economy that has hit over the six-year low of 5 per cent. The blueprint for the stimulus is ready that would be announced by Finance Minister Nirmala Sitharaman in the next few days.

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