Bill introduces to enhance borrowing limited of state

Himachal Pradesh Government introduced a bill in the state assembly to enhance the borrowing limit of state government from three per cent of state GDP to four per cent by amending Himachal Pradesh Fiscal Responsibility and Budget Management Act 2005. Chief Minister Jai Ram Thakur who holds the portfolio of finance said that the state FRBM bill was to regularise the additional borrowing of two per cent of GDP during thefincial year 2020-21 by the  state. He said that actual receipts of taxes declined during 2020-21 because of COVID – 19 pandemic due to which receipts of share of States in Central taxes also got  affected.  ” Due to the decline in Goods and Services Tax Compensation , the Central Government has allowed additional borrowing of 2 percent of GDP in the financial year 2020-21. He said  that in order to maintain the pace of development which has been affected by COVID – 19 pandemic , the State Government has availed partial additional borrowing .  Therefore, it has become necessary to amend the Himachal Pradesh Fiscal Responsibility and Budget Management Act, 2005. Now the state could borrow four percent of the state GDP in place of three percent. Section ten of the new amendment bill said that the fiscal deficit may exceed the level  of three per cent but shall not exceed four percent of the estimated gross GDP in FY 2020-21. The state could exceed the fiscal deficit  and could borrow more from the state owned finance resources . The State Government stated in the reply of a query in the house today the borrowing limit of the state remained five per cent of state GDP in 20022-21 , , 4.5 pc in 2021-22 and four pc till July 20, 2022-23.  Chief minister also informed that government could borrow three percent of the state GDP.