Centre hikes Telangana State’s FRBM limit

Telangana, which has been requesting the Centre for increasing its market borrowings limit for 2017-18, got a formal approval from the Centre.

The Centre has increased the loan borrowing limit of Telangana State under the Fiscal Responsibility and Budget Management Act State from 3 % of GSDP to 3.5 % as it fulfilled the required criteria laid down by the 14th Finance Commission.

The State received the communication late on Tuesday.

This would help the State to borrow Rs. 3,500 crore more from the market for the current financial year 2017-18. This is the second consecutive year when Telangana’s FRBM limit was increased to 3.5 from 3 % of GSDP.

Surplus state

The State recently wrote to the Centre that it fulfilled the required three criteria — the debt to GSDP ratio should not exceed 25%, a State should have revenue surplus and its interest payments should not exceed 10% of its total revenue receipts — and that its FRBM cap should be increased to 3.5%.

Centre recently asked the States to furnish compliance with the conditions by September 15.

Telangana was the first to have staked its claim supported by a detailed representation. While the State was allowed to raise Rs. 21,000 crore at the FRBM limit of 3% of its estimated GSDP of Rs. 7.14 lakh crore for 2017-18, it could borrow Rs. 3,500 crore more if the limit is enhanced to 3.5%.

Despite being a rich State with the highest growth rate, it has been feeling the pinch to fund development as well as social sector schemes.

Institutional tie-up

Though it had tied up with financial institutions for the Mission Bhagiratha and Two bedroom housing scheme, the State had been supporting its irrigation projects.

Even for getting institutional funding for Mission Bhagiratha, the State had to chip in with 15% of estimated cost of the project.

The State had borrowed Rs. 15,000 crore from the market this year till August-end, Rs. 300 crore from NABARD and Rs. 70 crore under Externally Aided Projects.

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