Lok Sabha Question No. 3554 (UNSTARRED), answered on 2021-12-20
Subject: Borrowing Ceiling Limits
Ministry: FINANCE
Asked by: Raghu Ramakrishna Raju Kanumuru, Srinivas Kesineni

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF EXPENDITURE

## LOK SABHA UNSTARRED QUESTION NO.  3554 TO BE ANSWERED ON MONDAY, 20 TH  DECEMBER, 2021 29 AGRAHAYANA, 1943 (SAKA)

## Borrowing Ceiling Limits

## 3554. SHRI KANUMURU RAGHU RAMA KRISHNA RAJU: SHRI KESINENI SRINIVAS:

Will the Minister of FINANCE be pleased to state:

- a) the  details  of  gross  borrowing  ceiling  limits  and  net  borrowing  ceiling  limits  of  Andhra Pradesh, prescribed by the Ministry for the financial year 2021-2022 along with full calculation details;
- b) whether these borrowings are taken into consideration by the Ministry while arriving at state gross  borrowings  ceiling  limit  and  net  borrowing  ceiling  limit  as  per  FRBM  Act  since  the borrowings  of  state-owned  entities  are  being  serviced/escrow  state  revenue  through  State Budget and if so, the details thereof;
- c) whether the Ministry would disclose the office Memorandums in the public domain from time to  time  about  states'  gross  borrowings  ceiling  limit  consents  with  full  calculation  details  for ensuring transparency in public financial matters as RBI and other externally aided agencies have been doing the same and if so, the details thereof; and
- d) whether  the  States  can  resort  to  additional  borrowings  by  exceeding  the  borrowing  limits prescribed by the Ministry in the name of State-owned shell/suit case companies for financing routine Government expenditure/freebie schemes and if so, the details thereof?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

- (a) For  the  financial  year  2021-22,  based  on  the  recommendation  of  the  15 th Finance Commission (XV-FC), the normal net borrowing ceiling (NBC) of the States have been fixed at 4 percent of Gross State Domestic Product (GSDP). GSDP for this purpose has been calculated based on  the  methodology  prescribed  by  the  XV-FC  and  data  published  by  National  Statistical  Office

(NSO).  For  the  State  of  Andhra  Pradesh,  the  projected  GSDP  for  the  year  2021-22  has  been determined as Rs. 10,61,802 crore. Accordingly, NBC of State of Andhra Pradesh has been fixed at Rs. 42,472 crore. Out of the normal NBC of 4 percent of GSDP allowed to the States for the current financial  year,  borrowings  of  upto  0.50%  of  the  GSDP  has  been  earmarked  for  the  incremental capital expenditure to be incurred by States during 2021-22.

Gross borrowing ceiling of a State for a particular year is calculated by adding the amount of repayment of liabilities by the State to the net borrowing ceiling and subtracting the amount of overborrowing  of  previous  period,  if  any.  Accordingly,  Gross  Borrowing  Ceiling  (GBC)  of  State  of Andhra  Pradesh  was  calculated  as  Rs.  38,978  crore  after  adding  Rs  14,430  crore  as  estimated repayments  of  liabilities  and  subtracting  the  over-borrowing  of  17,924  crore  of  previous  period. However, in view of request of the State and appreciating the difficulties likely to be faced by the State,  it  was  decided  to  spread  the  adjustment  of  the  over-borrowing  of  Rs.  17,924 crore  across three financial years.

In addition, States, including Andhra Pradesh are allowed to avail additional borrowing of up to 0.50% of GSDP based on certain performance criteria in power sector.

(b) No Sir, Borrowings of State owned entities was not taken into consideration while fixing the Net borrowing ceiling and Gross Borrowing ceiling of the State.

(c) The details of Open Market Borrowing (OMB) raised by States are available on the website of the Reserve Bank of India.

(d) All  States  including  Andhra  Pradesh  have  enacted  their  Fiscal  Responsibility  and  Budget Management (FRBM) Act. Compliance to the State FRBM Act is monitored by the respective State legislatures. Andhra Pradesh Fiscal Responsibility and Budget Management Act, 2005 makes the State  Government  responsible  to  ensure  prudence  in  fiscal  management  and  fiscal  stability  by progressive  elimination  of  revenue  deficit,  reduction  in  fiscal  deficit,  prudent  debt  management consistent with fiscal sustainability, greater transparency in fiscal operations of the government and conduct of fiscal policy in a medium term framework and matters connected therewith or incidental thereto.  Department  of  Expenditure,  Ministry  of  Finance  enforces  fiscal  roadmap  mandated  by Finance Commissions through the powers to approve borrowings by States under Article 293 (3) of the Constitution of India.

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