The Ministry of Finance has granted additional borrowing permission to Uttar Pradesh and Andhra Pradesh for successfully undertaking reforms in the public distribution system (PDS) and ease of doing business.
This will make an additional amount of Rs 7,106 crore available to them, said an official statement issued on Friday.
Uttar Pradesh has become the sixth state to complete the reform process in PDS to implement One-Nation-One-Ration-Card system. This has made it eligible to raise Rs 4,851 crore through open market borrowings. This amount will help the state in mobilising additional financial resources required to fight Covid-19.
The One-Nation-One-Ration-Card system ensures availability of ration to beneficiaries under the National Food Security Act (NFSA) and other welfare schemes, especially to migrant workers and their families, at any fair price shop across the country.
It also enables better targeting of beneficiaries, elimination of bogus cardholders, and enhances welfare besides reducing leakages.
The Department of Food and Public Distribution has confirmed that Uttar Pradesh, Andhra Pradesh, Telangana, Goa, Karnataka, and Tripura have successfully carried out reforms in PDS and implemented the system.
On the other hand, Andhra Pradesh has became the first state in the country to successfully undertake ease of doing business reforms and thus become eligible to raise an additional amount of Rs 2,525 crore through open market borrowings.
Ease of doing business is an important indicator of an investment-friendly business climate in the country. Improvement in the ease of doing business will enable faster future growth of the state economy.
To incentivise implementation of district-level and licensing reforms for ease of doing business, an additional borrowing facility of 0.25 per cent of the gross state domestic product (GSDP) has been allowed to states on the recommendation of the Department for Promotion of Industry and Internal Trade (DPIIT).
In May, the Centre had allowed an additional borrowing limit of up to 2 per cent of GSDP to the states for the financial year 2020-21 in view of the Covid-19 pandemic. This made an amount up to Rs 4.27 lakh crore available to the states.
One per cent of this is subject to implementation of four specific state-level reforms where weightage of each reform is 0.25 per cent of the GSDP. They are implementation of One-Nation-One-Ration-Card system, ease of doing business reform, urban local body and utility reforms, and power sector reforms.