Both Houses of the state Legislature on Thursday passed a Bill to amend an Act to increase the limit of the fiscal deficit from 3 per cent to 3.5 per cent of the Gross State Domestic Product (GSDP).
This will enable the state government to borrow Rs 5,688 crore from the market in the current fiscal, Deputy Chief Minister Sushil Kumar Modi said.
The Bihar Fiscal Responsibility and Budget Management (Amendment) Bill, 2020 was first passed in the Assembly. The Legislative Council then cleared it.
As per the Bihar Fiscal Responsibility and Budget Management (FRBM) Act, 2006, the state has to maintain its fiscal deficit within 3 per cent of its GSDP, which means it cannot borrow beyond that prescribed limit.
The passage of FRBM (Amendment) Bill from both the Houses will enable the state government to borrow Rs 5,688 crore from the market in the current fiscal ending March 2020, Modi who also holds the finance portfolio said while replying to a debate on the Bill.
The state will avail the loan to be spent on development work and not to pay salary and pension, Modi said.
No state can take loans on their own, he said adding that it is decided by recommendations of the Finance Commission.
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