Government eases norms for states to fund infrastructure projects

In a move that will potentially improve India’s infrastructure funding options, the cabinet allowed state government entities to directly tap bilateral agencies for resources. The new fund-raising route will allow direct borrowing by state public sector undertakings (SPSUs) from official development assistance (ODA) partners in countries such as Japan and the US. Currently, if an SPSU has to avail of such loans, it has to be facilitated by the concerned state government, with such borrowing reflecting on the latter’s books. Also, the borrowing has to be limited to 3 per cent of the gross state domestic product. As per the cabinet decision, eligible state entities can borrow directly with a government guarantee, which frees up the state’s borrowing space.