Telangana urges NITI Aayog to relax borrowing limit

Telangana Chief Minister K. Chandrasekhar Rao has urged NITI Aayog to relax current annual borrowing limit from 3 percent to 3.5 percent of GSDP as recommended by the 14th Finance Commission so that the state can use it for infrastructure development.

In a letter to NITI Aayog chairman Arvind Panagariya, he said that Telangana fulfils the conditions set by the commission for relaxing the borrowing limit.

The chief minister informed Panagriya that he has already written to union Finance Minister Arun Jaitley to fix the annual borrowing limit at 3.5 percent of Gross State Domestic Product (GSDP) taking into account the reduction in central transfers to the state.

The 14th Finance Commission recommended flexibility to the extent of 0.5 percent over and above the annual borrowing limit of 3 percent of GSDP of a state on three conditions - debt-GSDP ratio not exceeding 25 percent of GSDP, interest payments not exceeding 10 percent of revenue receipts and revenue surplus in the year in which borrowing limits are to be fixed and in the immediately preceding year.

"I need not emphasise the importance of increasing public investment to revive the economy which has been witnessing a slowdown in recent years," said the chief minister in his letter.