New Delhi: The Department of Expenditure, Ministry of Finance, has granted additional borrowing permission of Rs 28,204 crore to 10 states for undertaking the stipulated reforms in the power sector. Andhra Pradesh has got Rs 3,716 crore, Assam Rs 1,886 crore, Himachal Pradesh Rs 251 crore, Manipur Rs 180 crore, Meghalaya Rs 192 crore, Odisha Rs 2,725 crore, Rajasthan Rs 5,186 crore, Sikkim Rs 191 crore, Tamil Nadu Rs 7,054 crore and Uttar Pradesh Rs 6,823 crore.
Ministry of Finance, based on the recommendations of 15th Finance Commission had decided to grant additional borrowing space of up to 0.5 per cent of the Gross State Domestic Product (GSDP) to the states every year for a four year period from 2021-22 to 2024-25 based on reforms undertaken by the states in the power sector. This was announced by Finance Minister Nirmala Sitharaman in the Budget speech of 2021-22.
The objectives of granting financial incentives as additional borrowing permissions for taking up reforms in the power sector are to improve the operational and economic efficiency of the sector, and promote a sustained increase in paid electricity consumption. Detailed guidelines and marking criteria in this regard were issued by the Department of Expenditure on 09th June 2021.
In order to avail additional borrowing space linked to power sector reforms, the state governments had to undertake a set of mandatory reforms and also meet stipulated performance benchmarks. The reforms to be carried out by the states were progressive assumption of responsibility for losses of public sector power distribution companies (DISCOMs) by the state government, transparency in the reporting of financial affairs of power sector including payment of subsidies and recording of liabilities of governments to DISCOMs and of DISCOMs to others.
In the financial year 2022-23 too, the states can avail the facility of additional borrowing linked to reforms in the power sector. An amount of Rs 1,22,551 crore will be available as incentive to the states for undertaking these reforms in 2022-23. The states who could not complete the reform process in 2021-22 may also avail benefit of additional borrowing earmarked for 2022-23, if they carry out the reforms in the current financial year. /BI/
