NEW DELHI: Prime Minister Narendra Modi on Tuesday posted a blog on the professional networking site “LinkedIn” to assert that states were the net gainers of resources during the recent Covid pandemic.
But more important, the PM said many states carried out much-delayed reforms because of linkage with additional borrowings. “Officials who have been working on these reforms suggest that without this incentive of additional funds, enactment of these policies would have taken years,” he wrote.
It began in May last year when the Centre allowed states to borrow an extra 2 per cent of their GSDP (gross state domestic product).
The four reforms to which additional borrowings were linked (with 0.25 per cent of the GSDP tied to each one) were meant to improve the ‘ease of living’ to the public. As a result, the states got an extra Rs 1.06 lakh crore.
The first reform under the ‘One Nation, One Ration Card’ policy required states to seed all ration cards with Aadhaar. About 17 states completed this reform and were eligible for additional borrowings of Rs 37,600 crore. The second reform made renewal of business-related licences under seven Acts automatic. Twenty states completed this reform and were allowed additional borrowing of Rs 39,521 crore.
The third reform required states to notify floor rates of property tax and of water and sewerage charges. Around 11 states completed these reforms and were granted additional borrowing of Rs 15,957 crore.
The fourth reform was direct benefit transfer in lieu of free power to farmers. Additional borrowing of 0.15 per cent of the GSDP was linked to this.