Centre fulfils Telangana wish of FRBM limit raise

Hiked FRBM limit to help state implement projects.

Update: 2016-04-06 21:58 GMT
The TS government has been demanding raise of the FRBM limit to 3.5 per cent since the past one year, in vain.

Hyderabad: The TS government is upbeat over the Union Cabinet on Wednesday approving the 14th Finance Commission recommendations on raising FRBM limit from 3 per cent to 3.5 per cent of GSDP to secure loans for revenue-surplus states.

The TS government has been demanding raise of the FRBM limit to 3.5 per cent since the past one year, in vain. However, the enhanced limit would be applicable only from the just commenced financial year (2016-17) which started on April 1, while TS has been seeking the hike from 2015-16.

The TS government expects to secure an additional Rs 2,500 crore in loans this year with this relaxation. Incidentally, the 14th Finance Commission had categorised only TS and Gujarat as 'revenue-surplus states' and recommended raising their borrowing limit from 3 per cent to 3.5 per cent in 2015. As per FRBM norms, states will be allowed to secure loans up to 3 per cent of GSDP.

Chief Minister K. Chandrasekhar Rao and TS finance minister Etela Rajender met Prime Minister Narendra Modi and Union finance minister Arun Jaitely several times in New Delhi during the last one year and sought implementation of the 14th Finance Commission recommendations. Their requests had been ignored, till now.

On Wednesday, the Union Cabinet approved the hike of FRBM limit to 3. 5 per cent to revenue-surplus states, but made applicable only from 2016-17. The state government is heavily dependent on loans to fund its various flagship programmes like 2BHK housing scheme for poor, Mission Bhagiratha, Mission Kakatiya etc.

It is also under pressure to waive the remaining Rs 8,000 crore crop loans this year for which it needs additional funds. The state government had even made a provision for securing additional loans in its Budgets last year and this year, anticipating that the Centre would enhance the FRBM limit.

Though it could not secure additional loans for last year at this stage, the government is relieved that the Centre gave its nod for additional loans at least for this year.

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