States to be allowed to borrow additional 0.5% of GSDP, Gross budgetary support increased by Rs 40,000 crore

The Finance Minister Shri Pranab Mukherjee in his Budget Speech informed the Lok Sabha today that government has taken a conscious and bold decision to enhance the Gross Budgetary Support (GBS) for the Annual Plan 2009-10 by Rs.40,000 crore over the Interim Budget for 2009-10. He stressed that bulk of enhanced GBS is directed towards public investment in infrastructure with special emphasis on rural infrastructure, raising growth potential and leading to income generations.

Besides this, Shri Mukherjee informed the House that the State Governments will be permitted to borrow additional 0.5% of their GSDP by relaxing the fiscal deficit target under FRBM from 3.5% to 4% of their GSDP. This will enable the State Governments to raise additional open market loans of about Rs.21,000 crore in the current year.

Thus, total additionality in the Plan Expenditure by Centre and the States put together would be Rs.61,000 crore over Interim Budget. "I do believe that this fiscal expansion will go a long way in reversing the impact of slowdown and accelerate over growth revival in the medium term", Shri Mukherjee emphasized

Source : Equity Bulls

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