Hyderabad: To increase the borrowing limit, the AP government has decided to amend the Fiscal Responsibility and Budget Management (FRBM) act in the next Assembly session. According to present FRBM act that the borrowing limit is 3% of the Gross State Domestic Product (GSDP). Now, the state government wants to increase the borrowing limit from 3% to 3.5%. By this, the state government will be able to borrow about Rs 3,000 crore more than the present borrowing limit.
The finance department officials are preparing the draft amendment bill to introduce it in the next Assembly session. After the amendment, the state government has to send it to the Centre for its approval. The central government also wants to increase its borrowing limit. At present, the centra; government’s borrowing limit is 3% of the Gross Domestic Product (GDP). To increase the borrowing limit centre government has appointed a committee to study on the issue.
According to sources the centre is likely to amend its FRBM act to borrow 3%-4% of GDP. To institutionalise financial discipline, reduce the fiscal deficit and improve macroeconomic management and overall management of the public funds , the Centre brought the FRBM Act into force in 2003. Now, the Centre wants to review the implementation. The TD government from the beginning has been asking for amendment to the Act. At present the borrowing limit of state is Rs 18,000 crore per year. After the amendment of FRBM act the state government’s borrowing limit will be increased to about Rs 21000 crore per year.
