Centre eases norms for states to get external loans

With a view to promoting development projects, the Centre has streamlined the process of availing external loans by state governments.
"...To further streamline the process of assessing external loans, it has now been decided that there may not be any need to examine the proposals of state governments for external loan assistance from the debt sustainability angle," the Department of Expenditure said in a memorandum.
As per the existing practice, the proposals of state government for procuring structural adjustment loans are examined by the Centre taking into account their fiscal position.
Henceforth, the memorandum said, the external loan proposals would be considered by the Centre on the basis of 'self certification' by the state concerned with regards to certain specified parameters.

The states would be required to certify that the loans for Externally Aided Projects (EAP) would be generally used in areas within the national priorities.
"For the EAP loans passed on to the states, the commitment charges, foreign exchange risk, etc are borne by the states concern," said the new norms.
It further said the guidelines would be reviewed after two years to ensure that overall liabilities on account of external loans remain sustainable.