• Investment World
• eWorld
• Brand Line
• Mentor
• Life
• Brand Quest
• The New Manager
• BL Club
• Smartbuy
• Books

Stocks

• Quotes
• SE Diary
• Scoreboard
• Open-End Mutual Fund

Cross Currency

• Rates
  
  

Shipping

• Ports
  
  

Archives

• Yesterday
• Datewise
• Resources
• In Focus
• In Depth
• Events 2007

Group Sites

• The Hindu
• The Hindu ePaper
• Business Line
• Business Line ePaper
• Sportstar
• Frontline
• The Hindu eBooks
• The Hindu Images

Our Bureau

New Delhi, Feb. 26 Following today’s Cabinet approval to States to run a higher fiscal deficit in 2009-10, they will be able to borrow more for incurring higher capital expenditure, especially on infrastructure.

The fiscal deficit targets for the States are to be revised to 3.5 per cent of the Gross State Domestic Product (GSDP) for 2009-10.

The Government’s intent to allow relaxation of the fiscal deficit targets was spelt out in the Finance Minister, Mr Pranab Mukherjee’s recent speech in Lok Sabha as part of his reply to the discussions of the Interim Budget.

He had said that the States would not lose out on debt relief benefits available under the Debt Consolidation and Relief Facility (DCRF) guidelines.

The Union Cabinet also gave its nod for relaxation of the DCRF requirement of elimination of revenue deficit for 2009-10.

The States will not lose any DCRF benefits so long as they achieve the 3.5 per cent fiscal deficit target for 2009-10.

“It has been concluded that there is a need to extend the relaxation in fiscal deficit target of the States to 2009-10 to spur development of infrastructure and employment generation,” Mr P. Chidambaram, Union Home Minister, told reporters after the Cabinet meeting here today.

The facility allowed by the Centre for 2009-10 mirrors the one announced as part of the second economic stimulus package in January. In that package, States were enabled to raise additional market borrowing of 0.5 per cent of their GSDP, amounting to about Rs 30,000 crore, for capital expenditure.

The fiscal deficit target for 2008-09 was modified to 3.5 per cent. Also, the DCRF requirement of elimination of revenue deficit was also relaxed for 2008-09.

More Stories on : Policy | States | Economy

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Copyright © 2009, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line