October 1, 2022

Karnataka completes the ease of business reforms, given allowance for additional market borrowing

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The Union Government on Sunday extended the permit to five states inclusive of Karnataka, for borrowing an additional Rs 16,728 crore on an aggregate from the open market post their completion in the ease of doing business reforms.

The other four states in the permit list include Tamil Nadu, Andhra Pradesh, Madhya Pradesh and Telangana.

The finance ministry revealed that the state of Karnataka can additionally borrow a sum of Rs 4,509 crore.

Earlier in May, the Centre had made the decision to relate the additional borrowing allowance for exclusively those states which follow the reforms to bring in ease of doing business. A part of the reforms includes renewal of the registration certificates/approvals/licenses received by the businesses pertaining to various activities under Shops and Establishments Act, Factories Act, 1948, Legal Metrology Act, Inter State Migrant Workmen (RE and CS) Act, 1979, Municipal Corporation issued Drug Manufacturing or Selling or Storage or License Trade.

The state economy will have a linear curve for future growth with improvements in the ease of doing business.

Due to the Covid-19 pandemic, the borrowing limit was increased to 2 per cent for the states based on their GSDP.

The reforms identified were enforcement of one nation – one ration card system which is implemented by ten states, ease of doing business reforms implemented by five states, power sector reforms and local body/utility reforms enforced by two states

Apart from the borrowing allowances, the states who have completed three out of four reforms will be eligible for extra financial assistance. In order to facilitate the undertaking of reforms by more states for availing additional borrowing, the deadline has been pushed to February 15, 2021 by the finance ministry.

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