Assam legislative assembly cleared road for more loans

GUWAHATI: To enable more borrowing of more loans to tide over the fiscal stress on the State's economy following the COVID-19 pandemic, the Assembly passed 'The Assam Fiscal Responsibility and Budget Management (Amendment) Bill-2020' on Wednesday.

However, the borrowings under this Bill will be applicable only for the present fiscal (2020-2021).

The 'Statement of Objects and Reasons' of this Bill stated that "on account of lower tax revenue collection during the year 2018-19, the Union Finance Ministry adjusted a total amount of Rs 58,843 crore against the State's share of Central Taxes in 2019-20. Of this total amount, Rs 1,949 crore was adjusted for Assam".

Moreover, "in view of the COVID-19 pandemic leading to highly stressed fiscal situation, the Union Finance Ministry decided to provide the State additional borrowings limit up to 2 per cent of GSDP (Gross State Domestic Product) for 2020- 21 subject to amend of AFRBM (Assam Fiscal Responsibility and Budget Management Act)", added the statement.

Earlier, referring to the State government's decision to go for additional borrowings in the mentioned backdrop, Finance Minister Himanta Biswa Sarma informed the House, "At present, the State government can borrow 3.5% loan of the total GSDP."

The GSDP is the sum total of value added by different economic sectors (Agriculture, Industry & Services) produced within the boundaries of a State. It is one of the measures of economic growth for a State's economy.

He added, "But, because of the pandemic stress on the State's economy, the Central government has further given the States some relaxations for taking more loans. Accordingly, we'll be able to seek additional borrowings of 2.5% of GSDP for 2020-21. The maximum loan limit is approximately Rs 6,000 crore.

"In this regard, the Centre has given us two options: If we borrow more within the prescribed limit then the principal amount will be refunded by the Central government. However, the State government will have to pay the interest.

"On the other hand, the Central government will refund the entire amount (principal as well as the interest) if we borrow less (within the prescribed limit of Rs 6,000 crore)."

Sarma added, "We hope that the State's economy will rebound by the end of this financial year.

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