Punjab Cabinet amends FRBM Act for Rs 928 crore additional borrowing

The Punjab Cabinet on Monday decided to amend the Punjab Fiscal Responsibility and Budget Management (FRBM) Act, 2003, to allow the state to make additional borrowing of Rs. 928 crore in 2019-20, over and above its net borrowing ceiling of 3 per cent of Gross State Domestic Product (GSDP).

"In order to provide relief to the states on account of lower tax devolution during 2019-20, and in view of the hardships being faced by them in managing their finances, the Government of India had earlier decided to allow additional borrowing of Rs. 58843 crore in 2019-20 to the 29 states as a one-time special dispensation, beyond the eligibility of the states," read a Punjab government release.

"It may be recalled that the Punjab Fiscal Responsibility and Budget Management (FRBM) Act, 2003 was enacted to provide for the responsibility of the state government to ensure inter-generational equity in fiscal management and long-term financial stability, by achieving sufficient revenue surplus, eliminating fiscal deficit and prudential debt management consistent with fiscal sustainability," it read.

The Act was last amended in 2011 in conformity with the recommendations of the Thirteenth Finance Commission.