Central government has allowed states to borrow additional 2 percent of their SGDP over and above the 3 percent of SGDP that they are usually allowed. However, only 0.5 percent of the borrowing can be done automatically. For the next 1.5 percent, states will be allowed to borrow only if they show progress in implementing some reforms.
So, how desperately do states need the extra borrowing and how easy or tough are these standards that the Centre has set?
Latha Venkatesh spoke to TS Singh Deo, health minister of Chhattisgarh, Thomas Isaac, finance minister of Kerala, M Govinda Rao, former member of 14th Finance Commission, and K Ramakrishna Rao Principal Secretary, Finance of Telangana.