Government increases states’ borrowing limit

January 29th, 2009 - 4:20 pm ICT by IANS  

New Delhi, Jan 29 (IANS) The borrowing limit of state governments will be increased and their fiscal deficit targets relaxed to allow them raise funds for capital expenditure for 2008-09, the government said Thursday.The cabinet committee on economic affairs, which met Wednesday evening, decided to allow states to borrow up to 3 percent of their respective gross state domestic product (GSDP) with an additional borrowing limit of 0.5 percent of their GSDP.

The additional market borrowing of 0.5 percent, amounting to about Rs.300 billion (Rs.30,000 crore) is part of the second economic stimulus package, announced by the government in December.

In addition, revenue deficit targets of the states have also been relaxed during 2008-09, provided they achieve the fiscal deficit target of 3 percent and maintain revenue balance in 2009-10.

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