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Telangana CM writes to NITI Aayog for relaxed borrowing limit


Telangana Chief Minister K Chandrasekhar Rao has sought the support of NITI Aayog Vice Chairman Arvind Panagariya to relax the current annual borrowing limits from 3 per cent to 3.5 per cent of Gross State Domestic Product (GSDP) for the state.

The 14th Finance Commission has recommended flexibility to the extent of 0.5 per cent over and above the annual borrowing limit of 3 per cent of the GSDP of a state on fulfilling three conditions which Telangana meets, Rao wrote in a letter to Panagariya today.

“… Namely (conditions), i) debt to GSDP ratio not exceeding 25 per cent of GSDP, ii) interest payments not exceeding 10 per cent of revenue receipts and iii) revenue surplus in the year, in which borrowing limits are to be fixed…,” the letter said.

In the letter, Rao said that since Telangana fulfills these conditions, he has already requested the Union Finance Minister to ensure that the annual borrowing limits of the state for 2015-16 are fixed to the extent of 3.5 per cent of GSDP, taking into account reduction in central transfers to the state.

“I assure you that the state government will use the additional fiscal space on account of relaxation of borrowings limits only for infrastructure development. I request your support for the relaxation of borrowing limits,” the letter said.

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