Our Bureau

New Delhi, Feb. 26

THE Twelfth Finance Commission (TFC) has recommended that States, like the Central Government, must decide their annual borrowing programmes within the framework of their respective fiscal responsibility legislations.

In its report, which was tabled in Parliament , on Saturday the TFC has recommended the creation of an independent body, like a loan council, to supervise the States as regards the overall limit to their annual borrowings from all sources.

The Loan council, with representatives from the Finance Ministry, the Planning Commission, the Reserve Bank of India and the State Governments, may at the beginning of each year announce the borrowing limits for each State, the TFC report said.

Besides suggesting the de-linking of grants and loans in plan assistance, the commission has also underscored the need to let the States access the markets directly for their borrowing requirements.

(This article was published in the Business Line print edition dated February 27, 2005)
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