28 states cleared to borrow up to Rs 3.2L crore

New Delhi: The central government has allowed 28 states to cumulatively borrow up to Rs 3.2 lakh crore from the open market in the first nine months of this fiscal year.

This means the states could borrow the total amount in April itself if required, to meet their expenses related to the Covid-19 outbreak.

In a letter dated March 23, the finance ministry asked the Reserve Bank of India to make the necessary arrangements in consultation with the states to raise up to 50% of their net borrowing ceiling for fiscal 2021.


Maharashtra has been allowed to borrow Rs 46,182 crore and Tamil Nadu, up to Rs 28,880 crore. West Bengal can borrow up to Rs 20,362 crore, Rajasthan up to Rs 16,387 crore and Punjab as much as Rs 9,098 crore. The decision has come at a time when the states are facing a sharp decline in tax revenue owing to the lockdown.

While the RBI has increased the ways and means advances to states by 30%, the finance ministry has released Rs 17,287.08 crore in revenue-deficit grants and state disaster response mitigation funds for FY21.

While both Maharashtra and West Bengal have sought packages worth Rs 25,000 crore from the Centre, Maharashtra has also asked the central government to clear its dues of Rs 16,654 crore and West Bengal has asked for arrears of Rs 36,000 crore.

Among others, Punjab has asked the central government to release GST compensation worth Rs 6,000 crore until March 31 and clear GST arrears of another Rs 2,000 crore. Tamil Nadu has sought a package of Rs 4,000 crore along with other financial support.