Andhra Pradesh and Uttar Pradesh will get to raise more funds because of their reform initiatives that were part of the conditions set by the finance ministry for higher borrowing by the states to meet the fallout of the pandemic.

Uttar Pradesh became eligible to raise Rs 4,581 crore extra debt after it rolled out the “one nation one ration card scheme”.

Andhra Pradesh got the permission to raise Rs 2,525 crore for its reforms in ease of doing business — the first state in the country to introduce such measures.

Andhra Pradesh was also among the five states granted permission last month for additional borrowings linked to PDS reforms.

The Centre has permitted the two states a combined additional borrowing of Rs 7,106 crore. Uttar Pradesh has become the sixth state to complete the reform process in PDS.

Last week, Andhra Pradesh, Telangana, Goa, Karnataka and Tripura received the finance ministry’s nod for an additional Rs 9,913 crore borrowing after they complied with the One Nation-One Ration Card system.

In view of the Covid-19 pandemic, the central government in May 2020 allowed an additional borrowing limit of up to 2 per cent of gross state domestic product (GSDP) to the states for 2020-21.

This made an amount up to Rs 4,27,302 crore available to the states. One per cent of this is subject to the implementation of four specific state-level reforms, where the weightage of each reform is 0.25 per cent of GSDP. These reforms include implementation of the One Nation-One Ration Card system, ease of doing business reform, urban local body or utility reforms and power sector reforms.

In the first half of the current fiscal, 27 states and two Union Territories have cumulatively raised Rs 3.53 lakh crore via market borrowings, which are a 57 per cent increase from the borrowings in the first half of 2019-20 (Rs 2.25 lakh crore), Care Rating said in a research note.

According to the borrowings calendar, states were to borrow a total of Rs 3.05 lakh crore in the first half of 2020-21. Their borrowings, however, during this period were 16 per cent, or Rs. 48,115 crore, higher than that.

The borrowing calendar for the second half of 2020-21 will be announced in the coming days.