Raj, Andhra allowed additional borrowing for power sector reforms


The Ministry of Finance on Friday granted additional borrowing permission of Rs 7,309 crore to Rajasthan and Andhra Pradesh for undertaking stipulated reforms in the power sector.

While Rajasthan has been allowed to borrow an additional Rs 5,186 crore, Andhra Pradesh has been allowed to borrow Rs 2,123 crore, as per the recommendation of the 15th Finance Commission.

Apart from Rajasthan and Andhra Pradesh, nine other states — Assam, Goa, Kerala, Manipur, Meghalaya, Odisha, Sikkim, Tamil Nadu and Uttar Pradesh — have also submitted their proposals to the Ministry of Power, which are under examination.

Additional borrowing permission will be issued to the eligible states on receipt of recommendation from the Ministry of Power.

The Ministry of Finance has decided to grant additional borrowing space of up to 0.5 percent 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 the reforms undertaken by the states in the power sector.

This was announced by Finance Minister Nirmala Sitharaman in her Budget speech of 2021-22. This will make available additional resources of more than Rs 1 lakh crore every year to the states.

In order to avail additional borrowing for power sector reforms, a state government has to undertake a set of mandatory reforms and also meet stipulated performance benchmarks.

Once, the reforms have been undertaken by a state, its performance is evaluated on the basis of percentage of metered electricity consumption against total energy consumption, including agricultural connections, subsidy payment by direct benefit transfer (DBT) to consumers, payment of electricity bills by government departments and local bodies, installation of prepaid meters in government offices and use of innovations and innovative technologies.



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