Karnataka Cabinet to borrow 33\,000 crore to tide over crisis

BENGALURU: The Karnataka Cabinet on Tuesday decided to borrow Rs 33,000 crore making use of the window the RBI will soon open for states to tap the debt market to overcome the severe financial crunch the Covid-19 pandemic has thrust upon them. A series of lockdowns and poor business climate has left a gaping hole in the state finances forcing the government to borrow to feed daily governmental expenses.

Two weeks ago, the Centre placed two options before the states to compensate for the sharp drop in the GST revenues due to the pandemic. Karnataka opted for the first option under which the Centre will bear the entire principal and interest payments out of the GST cess levied on sin and luxury items.

With the Centre allowing states to borrow funds up to 5% of GSDP as a one-off measure in view of the pandemic, Karnataka has decided to make use of it.

“We have the leeway to borrow up to 36,000 crore, but the Cabinet has decided to borrow only 33,000 crore,” law minister JC Madhuswamy said in his briefing after the Cabinet meeting.

The fiscal responsibility and budget management law limits a state’s borrowing cap at 3% of its GSDP. Under the option Karnataka has chosen, it can borrow 1% of GSDP without any conditions, but it will have to meet certain timeline-linked reforms to qualify to borrow another 1% of GSDP.

All these years, Karnataka used the funds borrowed from debt market for capital investment, but for the first time, it has had to borrow to fund revenue expenditure. “All these years, we have been a revenue-surplus state, but the pandemic has left us with a huge revenue deficit,” the law minister said.

After the August 27 GST Council meeting to discuss the GST compensation payable to states, the Centre had placed two options before the states. While the first covered the revenue shortfall arising out of the implementation of GST, the second one also covered the shortfall in collections due to Covid-19 alongside shortfall due the GST implementation.

Karnataka would be eligible for a total compensation of 18,289 crore under the first option. Out of this, the GST cess collections will provide Rs 6,965 crore.

As for the remaining Rs 11,324 crore, the state government would be able to borrow through a special window which the Centre will facilitate with RBI’s help. The option will also entitle the state to an additional borrowing of up to 1% (Rs 18,036 crore) of GSDP.

Karnataka Cabinet to borrow 33\,000 crore to tide over crisis

Earthquake near Kathmandu, Nepal Today With Magnitude 5.3 | Earthquake in Nepal

Earthquake With Magnitude 5.3 Strikes Near Kathmandu, Nepal

An earthquake of magnitude 5.3 was reported near Kathmandu, Nepal on Wednesday morning, according to India's National Center for Seismology.

Earthquake With Magnitude 5.3 Strikes Near Kathmandu, Nepal

An earthquake of magnitude 5.3 was reported near Kathmandu, Nepal. (Representational)

Kathmandu, Nepal:

An earthquake of magnitude 5.3 was reported near Kathmandu, Nepal on Wednesday morning, according to India's National Center for Seismology.

The epicentre of the earthquake was 48 km east (E) of Kathmandu, Nepal, the agency said. The earthquake struck at 5:04 AM IST at a depth of 10 km from the surface.

Tremors were felt in the following areas:

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Karnataka Cabinet to borrow 33\,000 crore to tide over crisis

A DIY guide to the NPS | Value Research

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A DIY guide to the NPS

Here is a step-by-step procedure to get your NPS account up and running

A DIY guide to the NPS

You are not a finance person and all talk of asset allocation and stock markets goes over your head. Can you still invest in the NPS? Yes, you can. What's more, you can do it all on your own. Here's a step-by-step guide to opening and operating an NPS account.

1. You can open an NPS account either through designated branches of the 26 banks which offer the scheme or through the eNPS portal.

2. To qualify for an NPS account, you need to be an Indian citizen of age 18 to 65 years. To open an account, you need a PAN, a mobile number, email ID and an active bank account with the net-banking facility enabled. Aadhaar is no longer mandatory to open an NPS account.

3. On the registration page of the eNPS portal, enter your bank details and PAN, as requested. Choose Tier I as that is your primary retirement account. You will be required to generate and submit an OTP. Make sure your mobile phone is handy at this stage. Next, your bank will verify your account for KYC compliance. Provide your personal details as requested on the site, save and proceed.

4. You will have to opt for either Active or Auto choices. Active is the better choice, and requires you to decide the percentage of your monthly contribution to equity (E), government bonds (G), corporate (B) and alternative assets (A). If you are below 55 years, peg your E at 70 per cent and G and C at 15 per cent each. The high equity allocation will help you earn inflation-beating returns until you are close to retirement. At age 55, you can move your accumulated sums in E and C to G to protect the corpus.

5. You will need to specify a single PFM or pension-fund manager for your money from a list of eight. Make your decision based on their track record (which is available on the Value Research website), and also the reliability and longevity of the sponsor. HDFC, ICICI Prudential and UTI are good options based on their current records.

6. Update your nominee details. Upload a cancelled cheque from your chosen bank account, along with a photograph and specimen signature.

7. Flag off your contribution to the NPS with Rs 500, making the payment through your net-banking account. If this is successful, you will receive a PRAN or permanent retirement account number, which will be your unique ID for all your future interactions with the NPS.

8. To complete the account opening, you must select the 'print and courier' option. Print out the completed form, paste your photo, sign the form and courier it to Central Record keeping Agency for eNPS, whose address is provided on the site.

Now you can sit back and let the PFMs do the work of managing your money. Make sure that you contribute at least Rs 1,000 yearly to keep the account active. Ideally, phase out your NPS contributions via monthly instalments.

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