Business Standard

As freebies debate rages, a look at states' contingent liabilities

The net borrowing ceiling of states is mandated by the FRBM Act. However, the upper limit of what their contingent liabilities can be is set by states' own legislative bodies

Nirmala Sitharaman

Union Finance Minister Nirmala Sitharaman

Arup Roychoudhury New Delhi
In the recent Monsoon Session of Parliament, Finance Minister Nirmala Sitharaman informed Lok Sabha that borrowings by public sector undertakings and special purpose vehicles of states, where the principal and/or interest is being serviced by the state, will come under borrowings of that state.

Many such instances had come to the Finance Ministry’s notice, Sitharaman said and added the Ministry’s expenditure department had communicated to the states in March 2022 that “borrowings by state PSUs, SPVs and other equivalent instruments, where principal and/or interest are to be serviced out of the state budgets and/or by assignment of taxes/cess or

Don't miss the most important news and views of the day. Get them on our Telegram channel

First Published: Aug 30 2022 | 6:24 PM IST

Explore News

To read the full story, subscribe to BS Premium now, at just Rs 249/ month.

Key stories on are available only to BS Premium subscribers.

Register to