Govt allows 2 states to avail ₹7,309 crore additional borrowing for power sector

Apart from these two states, Assam, Goa, Kerala, Manipur, Meghalaya, Odisha, Sikkim, Tamil Nadu and Uttar Pradesh had also submitted their proposals (Photo: Reuters)Premium
Apart from these two states, Assam, Goa, Kerala, Manipur, Meghalaya, Odisha, Sikkim, Tamil Nadu and Uttar Pradesh had also submitted their proposals (Photo: Reuters)
 2 min read . Updated: 28 Jan 2022, 07:17 PM IST Livemint

The ministry of finance had launched a programme in June 2021 to allow additional borrowing space of ₹80,000 crore to states, which is conditional on them undertaking and sustaining of specific reforms in the power sector

Listen to this article

The central government has granted additional borrowing permission of Rs7,309 crore to two states for undertaking the stipulated reforms in the power sector, said the ministry of finance in a statement on Friday. 

“While Rajasthan has been allowed to borrow additional ₹5,186 crore, Andhra Pradesh has been allowed to borrow additional ₹2,123 crore as an incentive to embark on the reform process," read the statement. 

Apart from these two states, Assam, Goa, Kerala, Manipur, Meghalaya, Odisha, Sikkim, Tamil Nadu and Uttar Pradesh had also submitted their proposals to the government, which are under examination. 

Additional borrowing permission will be issued to eligible states on receipt of the recommendation from the ministry of power.

Earlier last week, the ministry had stated that 20 states have expressed their interest in getting additional borrowing space for the power sector.

The ministry of finance had launched a programme in June 2021 to allow additional borrowing space of ₹80,000 crore to states, which is conditional on them undertaking and sustaining of specific reforms in the power sector.

Under the programme, the additional borrowing limit permitted for power sector reforms is 0.5% of the Gross State Domestic Product (GSDP) every year for a four year period from 2021-22 to 2024-25.

“This will make available additional resources of more than Rs. 1 lakh crore every year to the States. The objectives of the additional borrowing permissions are to improve the operational and economic efficiency of the sector, and promote a sustained increase in paid electricity consumption," the ministry said. 

The REC Ltd is working as the nodal agency for the implementation of the scheme, for the power ministry. 

In order to avail additional borrowing space, the state governments have to: 

  • Progressive assumption of responsibility for losses of public sector distribution companies (DISCOMs) by the state government.
  • Transparency in the reporting of financial affairs of power sector including payment of subsidies and recording of liabilities of Governments to DISCOMs and of DISCOMs to others.
  • Timely rendition of financial and energy accounts and timely audit.
  • Compliance with legal and regulatory requirements.

 

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Never miss a story! Stay connected and informed with Mint. Download our App Now!!

Close