After govt hikes market borrowing limit, states redraw their road maps

Union government has allowed states to borrow till their fiscal deficit hits 5 per cent of their respective gross state domestic product (GSDP)

Following the Centre’s decision to hike market borrowing limit, albeit conditional, states are busy redrawing their calendar to overcome the economic downturn amid lockdown due to the Covid-19 pandemic.

Finance Minister Nirmala Sitharaman had reminded that the states were authorised to borrow 75 per cent of their authorised limit (3 per cent of their respective gross state domestic product) but they had borrowed only 14 per cent of it by May 14.

States such as Kerala have front-loaded borrowing to meet their committed liabilities, including salaries, and are going to rely on meeting the four conditions to borrow the extra