State governments seek more borrowing freedom to fund growth plans

Arun Jaitley has also been urged by the states to release funds under centrally sponsored schemes

States have asked Union Finance Minister Arun Jaitley to relax their fiscal deficit targets and raise their borrowing capacity during a pre-Budget meeting. 

Further, state ministers have sought more spending for the farming sector and rural India in Budget 2017, which many of them hope will mitigate the impact of demonetisation.

Jaitley has also been urged by the states to release funds under centrally sponsored schemes and to announce a higher support price for pulses and coarse cereals.

“Common suggestions made at the meeting included more focus on relaxing FRBM (Fiscal Responsibility and Budget Management) limit in case of states for raising borrowing capacity by raising it by 1% or at least by 0.5%, expansion of bank branches in most remote areas, need for fiscal stimulus and allocation of high outlay for rural job creation,” a finance ministry statement said. 

The statement added that the finance minister assured the states that their demands would be considered, reported Live Mint.