oppn parties States Must Accept Reforms For Additional Borrowing

Story Of The Day

Tiranga Rally Is Excellent. Breaking The Law Was Not

October 17, 2026

People Are Talking About

People Are Talking About Junk Food Near Schools

News Snippets

  • Allahabad HC said that the UP Police is acting as law unto themselves as they detained a person unlawfully even before his arrest
  • Kolkata witnesses traffic snarls on the first day of the Durga Puja festival as revellers start pnadal-hopping
  • Neha Bora was subsequently released and Dipke is to appear before a magistrate today at noon
  • Delhi Police detained Cockroach Janta Party founder Abhijeet Dipke, Neha Bora of AISA, student leaders and supporters ahead of a rally in Connaught Place demanding Chief Election Commissioner Gyanesh Kumar's resignation. The protest followed the detention and jailing of two CJP leaders earlier in the week over demonstrations at Jantar Mantar
  • The Reserve Bank of India is considering further monetary tightening to counter capital outflows and increase the cost of betting against the rupee, according to bankers and analysts cited by Reuters. The measures follow recent rate increases and steps to drain liquidity as pressure on the currency and inflation concerns persist
  • India directed oil marketing companies to stop diverting sugar-based feedstocks for ethanol production in the 2026–27 supply year, according to a new tender issued on Friday. The companies have invited bids for 11 billion litres of ethanol made from alternatives including corn and broken rice, amid concerns about domestic sugar supplies and prices
  • Finance Minister Nirmala Sitharaman said India's trade imbalance with China was growing sharply and attributed the problem partly to restrictions on Indian goods and services entering the Chinese market. China subsequently said it was ready to work with India to address mutual economic and trade concerns; India's trade deficit with China reached $69 billion in the first half of FY2026–27, up 27% year-on-year
  • Indian equity benchmarks extended their recovery on Friday, with the Sensex rising 413.66 points to close at 74,729.27 and the Nifty 50 gaining 148.80 points to settle at 23,146.15. Information technology shares, including Tech Mahindra, Infosys and TCS, helped lift the indices
  • India defeated Zimbabwe by four wickets in the opening women's T20 International in Raipur, taking a 1–0 lead in the three-match series. Deepti Sharma and Niki Prasad combined in an 82-run stand after India's top order collapsed, helping the hosts chase down Zimbabwe's total of 114 for five
  • Indian wrestler Komal won bronze in the women's 59 kg category at the Under-23 World Wrestling Championships in Las Vegas, defeating Kazakhstan's Viktoriia Khusainova 7–2. Fellow Indian Amruta Pujari advanced to the women's 72 kg final after recording two pinfall victories
  • Indian shuttler Jagsher Singh Khangurra secured a bronze medal at the BWF World Junior Badminton Championships in Cairo
  • The Supreme Court of India upheld the Bombay High Court's decision quashing the 2020 write-off of ₹8,415 crore in additional tier-1 bonds issued by Yes Bank (Yes Bank). The court ruled that the bank's administrator lacked the authority to extinguish the bonds under the final reconstruction scheme, strengthening bondholders' claims
  • The Supreme Court issued notices to the Election Commission of India, Delhi Police and opposition leaders, including Rahul Gandhi and Akhilesh Yadav, in separate petitions concerning electoral-roll revision and protests held in Delhi on October 10–12. The court also directed the preservation of CCTV footage linked to allegations of police excesses
  • The Supreme Court ruled that a person converting from Hinduism to Islam cannot automatically claim backward-class reservation benefits in the new religious community solely on the basis of their previous caste status. The judgment upheld the Madras High Court's decision striking down a 2024 Tamil Nadu government order that permitted such certification for specified communities
  • The Election Commission of India ordered a Special Summary Revision of electoral rolls in 14 states and three Union Territories, using January 1, 2027, as the qualifying date for voter eligibility. The draft rolls are scheduled for publication on November 12, claims and objections will be accepted until December 11, and the final rolls are due on January 4, 2027
Delhi HC refuses to ban CJP's Tiranga rally at Central Park in Connaught Place today /////// Police says will control and regulate it /////// NDMC closes the park for the public on Friday and Saturday
oppn parties
States Must Accept Reforms For Additional Borrowing

By Sunil Garodia
First publised on 2020-05-24 19:21:51

About the Author

Sunil Garodia Editor-in-Chief of indiacommentary.com. Current Affairs analyst and political commentator. Author of Cyber Scams in India, Digital Arrest, The Money Trap and The Human Hack

As part of the Covid-19 package, the Centre has allowed the states to borrow up to 5% of their GDP. This is 2% more than the limit now. However, the Centre has attached several conditions before the states can do so.

The first 0.5% additional borrowing is unconditional and can be availed immediately. But to borrow the next 1% more, the states will have to accept reforms in the following four areas - agree to come under one nation, one ration card scheme, introduce ease of doing business measures as directed by the Centre, reform of power distribution companies and fiscal empowerment of local bodies. The final 0.5% additional borrowing is conditional to the states showing progress in any one of the four reform areas.

Some states are objecting to these conditions and are calling it "arm-twisting" or "blackmail". But is it really so? If states do not act responsibly, no amount of subsidy or borrowing will reverse their perennial shortfall of funds. The worst part is that the shortfall of funds is not always due to development work. Most of it is because the states keep illogical restrictions and red tape in allowing new business units, are oblivious to power theft and force discoms to give free power to a wide range of constituents and allow 'leakage' of funds from development schemes by not empowering local bodies and allowing crony capitalists to handle many such schemes through many innovative funds siphoning-off channels.

Now if the Centre wants the states to rectify the situation and show an inclination to be responsible by following these reforms, it cannot be called blackmail. It is just the stick which the Centre can use to ensure that the states do not waste funds. It can be said that in a federal structure, the Centre cannot interfere in the working of the states. But a condition to adhere to fiscal responsibility can always be attached to any provision for allowing additional borrowing. After all, the original limit of borrowing 3% of the GDP was also set to keep the profligacy of the states in check. Any increase in that limit should always come with conditions and the states should accept it for their own good.

But the states should force the government to first release the funds that are due to them. Borrowing entails a cost (as it is, the state' cost of borrowing is more than that of the Centre) and the states should borrow only if it is absolutely necessary. If the Centre releases the funds due to the states, many states will not have to borrow the full additional 2% being allowed to them. Alternatively, the states should ask the Centre to bear the interest burden of this additional borrowing as it is mainly on account of funds blocked by it. 

Other Stories You Make Like

Editorials

Growth Without Jobs Is a Warning

Growth Without Jobs Is a Warning

 Delhi Curbs: Has The Government Panicked?

Delhi Curbs: Has The Government Panicked?

In Depth

Grounds Of Arrest: The Supreme Court's Rule Must Be Followed By The Police On The Ground

Grounds Of Arrest: The Supreme Court's Rule Must Be Followed By The Police On The Ground

Editor's Pick

For the Goonj to Reverberate, Rahul Gandhi Must Take Regional Parties Along

For the Goonj to Reverberate, Rahul Gandhi Must Take Regional Parties Along
© 2014 India Commentary. All rights reserved.