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Ration Card reforms for even more state borrowing

by Staff
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Andhra Pradesh is set to raise Rs. 2,525 crores for undertaking reforms in the Public Distribution System and implementing the One Nation One Ration Card system. Nine states will be able to raise a total of Rs. 23,500 crore in additional funding by implementing the reforms. 

In May, the central government expanded the state’s borrowing limits from 3% to 5% of Gross State Domestic Product. Of the additional 2% borrowing, 0.25% is linked to completion of the One Nation One Ration Card system. The reforms in the PDS system are aimed at beneficiaries of the National Food Security Act including migrant workers and their families. This will ensure that beneficiaries can get ration from any fair price shop in the country. The borrowing is intended to provide state governments with added resources in dealing with the impact of coronavirus. 

The YSRCP government has expanded social welfare programs drastically since coming to power. Andhra Pradesh had exceeded its budgeted annual borrowing limit in the first half of FY 2020-21 itself. It has since received grants from the central government to bridge the gap between state revenues and spending. Additional borrowings are expected to be utilised in fulfilling populous schemes rather than post-COVID recovery of the state. 

The central government assigned 0.25% each to the implementation of power sector reforms, ease of doing business, and urban local body reforms. With the objective of availing as much borrowing as possible, Andhra Pradesh has implemented three of the four measures.

 

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