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In May, the government allowed states to raise additional debt on the condition of implementation of policy reforms. There is also a condition of ease of doing business. In terms of ease of work, the first assessment of ‘District Level Enterprise Improvement Action Plan’ is a condition to be completed.
The Finance Ministry said that these five states have fulfilled the condition of ease of doing business. Based on this, they have been given the option to raise an additional debt of Rs 16,728 crore in total. Explain that under the Fiscal Responsibility and Budget Management Act, states have to limit their debt to three percent of their gross domestic product (SGDP). In May, in view of the crisis of Kovid-19, the Central Government announced to raise the debt limit of the states to two percent overall with various reformist terms.
These conditions include one-country-one-ration cards, ease of doing business, reforms in municipal / public services and reforms in the power sector. They will have to implement these reforms by 15 February 2020, only then they will be allowed to take additional loans.
Each reform is exempted from 0.25 percent additional debt of SGDP. In this way, the state can collect 2.14 lakh crore additional financial resources.