States were becoming increasingly autonomous on funding pre-pandemic

Some were even on the verge of reducing central liability to zero

State governments were reducing their dependence on central government debt ahead of the Covid-19 pandemic.

Loans and advances from the centre had dropped from 4.6 per cent of outstanding liabilities in March 2016 to 3 per cent by March 2020, shows Reserve Bank of India (RBI) data. This declining trend has reversed following the impact of the pandemic on state finances.

The government’s offer of additional loans to states for capital expenditure has faced some state government ire on the grounds of the conditions attached. This reportedly includes a bar on pre-payment for the loan tenure of fifty years. States