The Cabinet has allowed financially sound State government entities to borrow directly from bilateral Official Development Assistance (ODA) partners for implementation of vital infrastructure projects.
In another decision the Cabinet also approved extension of the stock holding limit order for sugar given last October for a further period of six months till October 28, to check hoarding and profiteering.
Briefing newspersons after the Cabinet meeting on Wednesday the Finance Minister Arun Jaitley said the decision to allow State entities to directly borrow from the bilateral ODAs will give a boost to mega infrastructure projects across the country as they will not have to worry about their fiscal responsibility and budget management (FRBM) targets.
In line with its decision on foreign loans for infrastructure projects implemented by State enterprises, the Cabinet allowed the Mumbai Metropolitan Region Development Authority, a State entity, to borrow directly from Japan International Cooperation Agency (JICA) for implementation of Mumbai Trans Harbour Link (MTHL) project. The estimated project cost is ₹17,854 crore while the JICA’s loan portion is expected to be ₹15,109 crore.
Several State agencies are implementing major infrastructure projects of national importance. These projects, even if viable and sound, have huge funding requirements and borrowing by the State governments for such projects may exhaust their respective borrowing limits.
“The guidelines will allow the State government entities to get funding for big projects directly and therefore States’ spending on welfare schemes will not be affected,” Jaitley said.
Sugar stock-holding On stock holding limit order for sugar, an official statement said that the main objective of the decision is to enable the States to issue control order with the prior concurrence of the Centre for fixing stock limits/licensing requirements in respect of sugar, whenever need is felt by them.