Finance Ministry allows states to borrow additional INR 60,877 crore for pension scheme

NEW DELHI — The Finance Ministry on Tuesday approved an additional borrowing of INR 60,876.8 crore to 22 States in 2023-24 for contribution to the National Pension Scheme (NPS).

This will be over and above the net borrowing ceiling for 2023-24.

The normal ceiling for net borrowing by states has been fixed at 3 per cent of their gross state domestic product (GSDP). The GSDP currently stands at INR 8.59 lakh crore. The ministry also issued approval for raising INR 6.99 lakh crore for open market borrowing and INR 69,370.81 crore for availing of negotiated loans during 2023-24.

The finance ministry said it has also allowed extra borrowing to states equivalent to employer and employee share of contribution of its employees, over and above the 3 per cent ceiling.

Earlier in June, the Centre had approved additional financial incentives worth INR 66,413 crore to 12 states for power sector reforms.

The Union Finance Minister announced the initiative in the Union Budget 2021-22. Under this initiative, an additional borrowing space of up to 0.5 per cent of the GSDP is available to the states annually for a four-year period from 2021-22 to 2024-25.

On Tuesday, the ministry said that it had allowed additional borrowing of INR 39,175 crore to 12 States in 2021-22 and INR 27,238 crore to 6 states in 2022-23, linked to performance in the power sector.

For 2023-24, states are eligible to borrow INR 1.43 lakh crore on the recommendation of the power ministry.