Govt likely to roll back states' ability to borrow more, says report

New Delhi has already stopped compensating states for the switch to the Goods and Services Tax regime from this year

India may deny any leeway to states wanting more headroom to borrow as the Centre aims to tighten fiscal policy in a bid to assuage global investors, people familiar with the matter said.

States’ borrowing, including those to undertake power sector reforms, is likely to be capped at 3.5 per cent of their gross domestic product for the fiscal starting April 1. That is lower than the 4 per cent cap for the current year, said the people. Finance ministry spokesman didn’t answer to calls to his mobile phone seeking comment.

Some provincial governments are opposed to the cut as it would