New Delhi (ABC Live India): The Department of Expenditure, Ministry of Finance, has extended the deadline for the States to complete citizen-centric reforms in various sectors. Now, if the recommendation from the nodal Ministry concerned regarding the implementation of the reform is received by 15th February 2021, the State will be eligible for reform linked benefits.
Centre Govt Extends Deadline for Citizen Centric Reforms By States
New Delhi (ABC Live India): The
Department of Expenditure, Ministry of Finance, has extended the deadline for
the States to complete citizen-centric reforms in various sectors. Now, if the
recommendation from the nodal Ministry concerned regarding the implementation of
the reform is received by 15th February 2021, the State will
be eligible for reform linked benefits.
The Government of India has
identified four critical areas for reforms by the States:
- Implementation of One Nation
One Ration Card System,
- Ease of doing business
- Urban Local body/ utility
- Power Sector reforms.
These were communicated to the States
on 17th May 2020.
States successfully completing the
reforms are eligible to get two benefits. The such States get the facility of
additional borrowing equivalent to 0.25 percent of their Gross States Domestic
Product (GSDP) for completing each reform. Under this facility, additional
borrowings of up to Rs.2.14 lakh crore is available to the States on completion
of all the four reforms.
In view of the resource required
to meet the challenges posed by the COVID-19 pandemic, the Government of India
had decided in May 2020 to raise the borrowing limit of the States by 2
percent of their GSDP. This was aimed at enabling the States to mobilize
additional financial resources of up to Rs.4.27 lakh crore. Half of this
special dispensation was linked to reforms. The purpose was to motivate the
States to carry out reforms in various citizen-centric areas.
The second benefit available to the
States completing three out of the four reforms is additional funds assistance
under the “Scheme for Financial Assistance to States for Capital Expenditure”.
Under the scheme, an amount of Rs.2,000 crore is earmarked for the States that
will complete at least three out of the four stipulated reforms.
The scheme was announced by the
Finance Minister on 12th October 2020 as part of AatmaNirbhar
Bharat Package 2.0. It is aimed at boosting capital expenditure by State
Governments are facing a difficult financial environment this year due to the
shortfall in tax revenue arising from the COVID-19 pandemic. A total amount of
Rs.12,000 crores have been earmarked by the Government of India under this
scheme. Capital Expenditure has a higher multiplier effect, enhancing the
future productive capacity of the economy, and results in a higher rate of
The twin incentives have pushed the
States to undertake the reforms. So far 9 States have implemented the One
Nation One Ration Card System, 4 States have completed the ease of doing
business reforms and one State has done the urban local body/ utility reforms.
Additional borrowing permission of Rs.40,251 crore has been granted to these
States. Extention of the date for completion of reforms is likely to motivate
other States also to complete the reform process expeditiously and avail the
linked financial benefits.