Two more States successfully implement reforms, get additional borrowing permission of Rs. 7,106 crore

Ministry of Finance has granted additional borrowing permission to two more States, Uttar Pradesh & Andhra Pradesh for successfully undertaking reforms in the Public Distribution System (PDS) and Ease of Doing Business. This will make an additional amount of Rs. 7,106 crore available to these States.

Uttar Pradesh has become the 6th State to complete the reform process in PDS to implement One Nation One Ration Card System. This has made the State eligible to raise an amount of Rs. 4,851 crore through Open Market Borrowings (OMBs). This amount will help the State in mobilizing additional financial resources required to fight COVID-19.

One Nation One Ration Card System ensures availability of ration to beneficiaries under the National Food Security Act (NFSA) and other welfare schemes, especially to the migrant workers and their families, at any Fair Price Shop (FPS) across the country. It also enables better targeting of beneficiaries, elimination of bogus/ duplicate/ineligible card holders. Thus, One Nation One Ration Card enhances welfare and reduces leakage.

To ensure seamless inter-state portability of a ration card, Aadhar seeding of all ration cards as well as biometric authentication of beneficiaries through automation of all Fair Price Shops (FPSs) with installation of electronic point of sale (e-PoS) devices are essential. Department of Food and Public Distribution is the nodal Ministry to assess reform claims of the States and recommend release of additional borrowing limit of 0.25 percent of GSDP.

The Department of Food and Public Distribution has confirmed that the States of Uttar Pradesh, Andhra Pradesh, Telangana, Goa, Karnataka and Tripura have successfully carried out aforesaid reforms in PDS and implemented One Nation One Ration Card System

Andhra Pradesh has became the 1st State in the country to successfully undertake “Ease of Doing Business” reforms and has thus become eligible to raise an additional amount of Rs. 2,525 crore through Open Market Borrowings. Earlier Andhra Pradesh had also completed PDS reforms to enable One Nation One Ration Card System.

Ease of Doing Business is an important indicator of an investment friendly business climate in the country. Improvement in the ease of doing business will enable faster future growth of the state economy. Therefore, in order to incentivize implementation of district level and licensing reforms for ease of doing business, an additional borrowing facility of 0.25 per cent of GSDP has been allowed to States on the recommendation of the Department for Promotion of Industry and Internal Trade (DPIIT). The reform envisages undertaking all of the following actions by the State Governments:

  1. The State will complete the first assessment of ‘District Level Business Reform Action Plan’ as intimated by DPIIT.
  2. The State will eliminate the requirements of renewal of certificates/ approvals/ licences obtained by businesses for various activities from the authorities at the State level as per list circulated by DPIIT. Collection of reasonable fees with automatic non-discretionary deemed renewal will also be permissible as reform if done in a transparent online, non-discretionary & automatic manner.
  3. The State will implement computerized central random inspection system under the Acts as per list circulated by DPIIT wherein allocation of inspectors is done centrally, the same inspector is not assigned to the same unit in subsequent years, prior inspection notice is provided to the business owner, and inspection report is uploaded within 48 hours of inspection.

In view of the unprecedented COVID-19 pandemic, the Central Government had in May, 2020 allowed additional borrowing limit of up to 2 percent of Gross State Domestic Product (GSDP) to the States for the year 2020-21. This made an amount up to Rs. 4,27,302 crore available to the States. One percent of this is subject to implementation of following four specific State level reforms, where weightage of each reform is 0.25 percent of GSDP: –


  1. Implementation of One Nation One Ration Card System;
  2. Ease of doing business reform;
  3. Urban Local body/ utility reforms; and
  4. Power Sector reforms



    Source PIB