In a bold move, the Centre has decided to clip the wings of truant states that blatantly borrow from the market through the special purpose vehicle (SPV) route with explicit state guarantee.
In a missive to all the states, the finance ministry has taken a strong exception to the guarantees given by states for borrowings by public sector undertakings. It has told the states that the Centre would not allow them to borrow through the SPV route if these borrowings finally make their way to the consolidated state funds.
Even if allowed to do so, the states will have to compulsorily go for credit rating of the debt offerings made by the PSUs but carrying the states
