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Center Allows More Borrowings

Bhubaneswar: The Union Government has granted additional borrowing permission of Rs 2,725 crore to Odisha Government for undertaking the stipulated reforms in power sector during the financial year 2021-22.

The Department of Expenditure, Ministry of Finance, has granted additional borrowing permission of Rs. 28,204 crores to 10 States including Odisha for adopting reforms in the power sector.

Based on the recommendations of the Fifteenth Finance Commission, the Ministry had 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 reforms undertaken by the States in the power sector.

The objectives of granting additional borrowing for taking up reforms in the power sector are to improve the operational and economic efficiency of the sector, and promote a sustained increase in paid electricity consumption.

In order to avail additional borrowing space linked to power sector reforms, the Centre had a set of mandatory reforms which includes progressive assumption of responsibility for losses of public sector power distribution companies (DISCOMs) by the State Government.

Transparency in the reporting of financial affairs of the power sector including payment of subsidies and recording of liabilities of the Governments to DISCOMs and of DISCOMs to others. Timely rendition of financial and energy accounts and timely audit and compliance with legal and regulatory requirements, were other reforms set by the Government of India.

The Ministry of Power has made an assessment of performance of States and determined their eligibility for granting additional borrowing permission. In accordance with this, Odisha has been allowed to go for additional borrowing of Rs 2,725 crore, sources said.

In the financial year 2022-23 too, the States can avail the facility of additional borrowing linked to reforms in the power sector. An amount of Rs. 1,22,551 crore will be available as incentive to States for undertaking these reforms in 2022-23.

States who could not complete the reform process in 2021-22 may also avail benefit of additional borrowing earmarked for 2022-23, if they carry out the reforms in the current financial year.