State taps Centre to borrow more

Hit hard by Covid-19 pandemic, and with revenue collection taking a beating due to the lockdown, the state government is planning to seek help from the Centre for raising more loans for the current fiscal 2021-22.

It is mulling to ask the Centre to increase Fis-cal Responsibility and Budget Management (FRBM) limit to

5 per cent for the same. The government has proposed to raise

`47,500 crore loans through auction of bonds in Budget 202122. However, it now plans to raise an additional `7,000 crore if the Centre enhances FRBM limit from 3.5 per cent to 5 per cent like last year to help states tide over the Covid financial crisis.

Under the FRBM Act, states are permitted to raise loans up to

3 per cent of GSDP. However, for revenuesurplus states, the limit set is 3.5 per cent of the GSDP. With Telangana being a revenue-surplus state, it can raise loans up to

3.5 per cent GSDP. However, the state government wants the Centre to enhance this limit to 5 per cent of GSDP which will provide an additional 1.5 per cent borrowing eligibility. Despite a corona-induced financial crisis, the state government presented an ambitious budget of

`2.30 lakh crore for

2021-22, which is significantly higher than

`1.82 lakh crore budget presented in the last fiscal 2020-21. However, the second wave and lockdown have affected earnings in the first two months of this fiscal, April and May.

The government is in dire need of more funds this fiscal to implement many schemes. It has already mobilised `4,500 crore loans through auction of bonds in April and May.