Odisha Granted Permission For Additional Borrowing Of Rs 2,725 Cr From Centre For Power Sector Reforms In 2021-22

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Bhubaneswar: The Centre has granted additional borrowing permission of Rs 28,204 crore to 10 states including Odisha for undertaking the stipulated reforms in power sector in 2021-22.

Of the total amount, maximum Rs 7,054 crore has been granted to Tamil Nadu, followed by Rs 6,823 crore to Uttar Pradesh, Rs 5,186 crore to Rajasthan, Rs 3,716 crore to Rajasthan and Rs 2,725 crore to Odisha, according to a release of the Ministry of Finance on Thursday.

Based on the recommendations of the 15th Finance Commission, the ministry had decided to grant additional borrowing space of upto 0.5% of the Gross State Domestic Product (GSDP) to the states every year for a four year period from 2021-22 to 2024-25 based on reforms undertaken in the power sector. This was announced by the Finance Minister in the Budget speech of 2021-22.

The financial incentives aim at improving the operational and economic efficiency of the power sector and promoting a sustained increase in paid electricity consumption. In order to avail additional borrowing, the states had to undertake a set of mandatory reforms and also meet stipulated performance benchmarks.

Once, the reforms were undertaken by a state, its performance was evaluated on the basis of different criteria to determine its eligibility for additional borrowing for 2021-22.

The Ministry of Power is the nodal ministry for assessment of performance of States and determining their eligibility for granting additional borrowing permission.

In the financial year 2022-23 too, the States can avail the facility of additional borrowing linked to reforms in power sector. An amount of Rs. 1,22,551 crore will be available as incentive to States for undertaking these reforms in 2022-23.