Telangana on Sunday urged the Centre to allow it to borrow at 5% of Fiscal Responsibility and Budget Management (FRBM) limit without preconditions and defer the linking of reforms to increased borrowing limits.
Welcoming the Centre decision to increase borrowing limit under FRBM from 3% to 5% of Gross State Domestic Product (GSDP), the state said it is not correct to link the increased borrowing limits to reforms when states are reeling under the Covid crisis.
The Centre had announced increase in FRBM limit linked to universalisation of ‘one nation one ration card’, ease of doing business, power distribution reforms and urban local body reforms.
Reacting to day five announcement of relief measures by Union Finance Minister Nirmala Sitharaman under the Rs 20 lakh crore Covid package, B. Vinod Kumar, Vice-Chairman, Telangana State Planning Board, said that the reforms are always welcome and they bring along a lot of pain in the initial stages of implementation.
“All states are now relaxing lockdown norms and the central government is also taking many measures to reopen the economy. After lifting of the lockdown, it is expected that there would be a sharp spike in Covid-19 cases, as is the experience at the global level and WHO warnings. Therefore, all energies and resources of the governments would be focused on mitigating the increased Covid cases and also the gradual safe reopening of economic activities. Under such circumstances, it would not be in the fitness of things to place additional burden on the state governments for undertaking critical reforms in the above sectors for providing liquidity support,” he said.
Vinod Kumar said the capacity of States would be severely constrained to undertake such reforms while facing the Covid crisis.
The Telangana Rashtra Samithi (TRS) leader said increase in FRBM borrowing limit was much awaited and the state had been demanding this for long but putting preconditions is not in the interests of federal spirit.
Referring to the entire package, Vinod Kumar said most of the package is through existing credit linked schemes by banks or through introduction of new credit schemes. He said these credit linked stimulus and benefits of structural reforms would take a long time to take effect.
