The State Assembly on Wednesday passed the A.P. Fiscal Responsibility and Budget Management (Amendment) Bill, 2020, paving the way for additional borrowing space of 2% of the Gross State Domestic Product (GSDP) for the financial year 2020-21 over and above the normal permissible limit of 3% of the GSDP.
Explaining the necessity to amend the A.P. Fiscal Responsibility and Budget Management Act, 2005, in the Assembly, Finance Minister Buggana Rajendranath Reddy said that the amendment was being made to implement the guidelines of the Finance Commission.
In fact, the amendments should have been made in 2015-16. The old and new amendments were incorporated in the Bill, he said.
The Minister said that the Central government had permitted the additional borrowing space, subject to implementation of specific State Level Reforms and carrying out necessary amendments to the FRBM Act.
During 2019-20, due to lower realisation of tax revenues, the Centre could not devolve taxes as promised. Also, the State government required more fiscal space for allocation to healthcare, to deal with the pandemic and address the gaps in health sector, he said. Accordingly, the Act was amended.
For the financial years from 2015-16 to 2020-21, the fiscal deficit shall not be more than 5% of the GSDP, including one-time additional borrowing of ₹2,534 crore permitted by the Central government for the year 2019-20. It included 2% of the GSDP additional borrowing permitted for the year 2020-21 in the wake of COVID-19 pandemic, he said, adding that the outstanding total liabilities should not exceed 35% of the estimated GSDP for the financial years from 2015-16 to 2020-21.
