Increased Borrowing limit of states – UPSC GS2

In May 2020, the Centre had announced to increase borrowing limits of states from 3% to 5% of their Gross State Domestic Product for 2020-21. Of the 2% extra borrowing limit, 1% was made conditional on the implementation of reforms in four focus areas.
Four Focus Areas:
  • One Nation One Ration Card: 
    • It required state governments to ensure that all ration cards in the state under the National Food Security Act (NFSA) were seeded with Aadhaar numbers of all family members.
    • This ensures availability of ration to beneficiaries under National Food Security Act (NFSA) and other welfare schemes especially the migrant workers and their families at any Fair Price Shop (FPS) across the country. 17 states have implemented this reform.
  • Improving ease of doing business:
    • It required states to ensure renewal of business-related licenses is made automatic, online and non-discretionary on mere payment of fees.
    • Another requirement was to implement a computerised random inspection system to reduce harassment and corruption.
  • Urban Local Bodies (ULBs) revenue reforms: 
    • It required states to:
      • notify property tax floor rates in accordance with circle property rates and
      • notify water and sewerage charges, to at least recover operation and maintenance (O&M) costs.
  • Power Sector Reforms: 
    • It required states to ensure:
      • Reduction in Aggregate Technical & Commercial (AT&C) losses
      • Targeted reduction in Average Cost of Supply and Average Revenue Realisation (ACS-ARR) gap and
      • Direct benefit transfer (DBT) of electricity subsidy to farmers.

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