The State has presented a strong case with the Union Finance Ministry in support of its request for early permission to raise open market borrowings to meet its immediate financial requirements.
Finance department Special Chief Secretary K. Ramakrishna Rao replying to queries raised by Union Finance Secretary T. V. Somanathan said the government had effectively used the amounts it raised as capital expenditure for schemes like Mission Bhagiratha which have become role models to the country. Participating in a video conference with Mr. Somanathan, Mr. Ramakrkishna Rao is understood to have raised objections to the manner in which the Centre was asking questions relating to borrowings of the previous years retrospectively.
The Union Finance Ministry is reported to have raised questions about the loans raised by the government in the name of corporations claiming that they had no capacity to repay. Mr. Ramakrishna Rao, however, is learnt to have pointed out that it was the Centre which gave permission to the States to borrow ₹1.27 lakh crore outside the FRBM norms.
The money borrowed by the State had been utilised for capital expenditure. The Centre had in fact asked the States to borrow rather than repaying the GST compensation due to them and the Centre was now citing the FRBM norms as well as the recommendations of the XV Finance Commission. “The XV Finance Commission has in fact recommended the constitution of an expert group to give suggestions on amendments to the FRBM Act, but no action has been initiated in this direction so far,” a senior official said. The Union Finance Secretary is understood to have told the State officials that the Centre had taken note of the issues/concerns expressed by the State. “We will examine these issues and will get back soon,” Mr. Somanathan was quoted as saying.
