Centre to pass loans directly to states

For reducing the interest burden of states, the government is planning to pass loans extended by multilateral agencies like World Bank and ...

For reducing the interest burden of states, the government is planning to pass loans extended by multilateral agencies like World Bank and ADB directly on to them. Presently, loans are provided in the form of grants and loans at higher interest rates.

But states would have to bear the risks arising out of fluctuations in foreign exchange rates during the tenor of the loans. The Finance Ministry is working out the modalities following an okay from the Planning Commission, sources said.

Considering the growing debt burden of states, the plan panel has given in- principle approval to the ‘back-to-back’ transfer of funds from external agencies to states. This would bring down the interest outgo of states to 5-7 per cent as against the 9 per cent interest on Central loans to states.

Story continues below this ad

The move would also ensure the Centre passing on the external loans to states without any loss on account of exchange rate risks or gain in interest rate differential.

The proposal says all external grants and loans received by the Centre for states would pass on to them as 100 per cent grant or loan as against the practice of 70 per cent loan and 30 per cent grant.

States would get the same maturity, moratorium and amortisation schedule that the Central government gets.

Anjana Krishna, IPS officer who stood firm against Ajit Pawar, is no stranger to overcoming setbacks

Anjana Krishna, who stood against Ajit Pawar, is no stranger to overcoming setbacks

India3 hr ago

Maharashtra-cadre IPS officer Anjana Krishna V S, who was in the news for being “reprimanded” by Deputy Chief Minister Ajit Pawar while taking action over alleged illegal mining, grew up on the outskirts of an area of Kerala’s Thiruvananthapuram district that has become notorious for the illegal granite mining.

View all shorts

Live Blog