The Centre has allowed Rajasthan to borrow an additional sum of Rs 2,731 crore after the state successfully undertook the reforms on ease of doing business parameters.

Rajasthan has now joined five other states — Andhra Pradesh, Karnataka, Madhya Pradesh, Tamil Nadu and Telangana — which have completed the reforms on ease of doing business to be eligible for additional borrowing.

These six states have been granted an additional borrowing permission of Rs 19,459 crore.

“The state (Rajasthan) has become eligible to mobilise additional financial resources of Rs 2,731 crore through open market borrowings. Permission for the same was issued by the department of expenditure on December 24,” the finance ministry said in a statement.

Ease of doing business is an important indicator of the investment friendly climate in the country.

The government had in May decided to link the grant of additional borrowing permissions to states that undertake the reforms to facilitate ease of doing business.

The reforms stipulated in this category include completion of first assessment of “District Level Business Reform Action Plan”, elimination of the requirements of renewal of registration certificates/approvals/licences obtained by businesses under various Acts.

In view of the resource requirement to meet the challenges posed by Covid-19, the government had in May enhanced the borrowing limit of the states by 2 per cent of their GSDP.

Half of this special dispensation was linked to the states undertaking citizen-centric reforms — implementation of the “One Nation One Ration Card System”, ease of doing business reform, urban local body/utility reforms and power sector reforms.

So far, 10 states have implemented the “One Nation One Ration Card System”, six states have done ease of doing business reforms and two states have done local body reforms.

Total additional borrowing permission issued so far to the states, which have done the reforms, is Rs 50,253 crore, the ministry added.