Words, words, words

If you’re wondering how seriously to take the government’s next stimulus package, spend a minute with West Bengal Finance Minister Asim Dasgupta, who also heads the Empowered Committee of State Finance Ministers. In the second stimulus package, the central government announced that states would be allowed to raise another Rs 30,000 crore through borrowings in the market (0.6 per cent of their GDP). This, Dasgupta said, is yet to be communicated to the states. Indeed, there has been no mention of waiving the FRBM prudential norms, which state that the states’ fiscal deficit should not exceed 3 per cent of their GDP. If states keep their deficit within this norm, they get some relief on their debt. So if states are to raise debt, this condition also needs to be relaxed.