Telangana Chief Minister K. Chandrasekhar Rao has urged the Centre to relax annual borrowing limit from 3.0 to 3.5 per cent of GSDP.
In a letter to NITI Ayog vice-chairperson Dr Arvind Panagariya, New Delhi, has stated the XIV Finance Commission had recommended flexibility to the extent of 0.5 percent over and above the annual borrowing limit of 3.0 percent of GSDP of a State on fulfilling three conditions, namely, debt-GSDP ratio not exceeding 25% of GSDP; interest payments not exceeding 10% of revenue receipts and revenue surplus in the year in which the borrowing limits are to be fixed and in the immediately preceding year. “As the State of Telangana fulfills these conditions, I have already requested the Union Finance Minister to ensure that the annual borrowing limits of the State for the year 2015-16 are fixed to the extent of 3.5 % of GSDP taking into account the reduction in Central transfers to the State.
Recalling Panagariya’s visit to the State on June 2 and holding extensive discussions on a number of issues concerning overall development of the economy, the Chief Minister assured that the State Government would use the additional fiscal space on account of relaxation of borrowings limits only for infrastructure development and sought his support for the relaxation of borrowing limits. (NSS)