Centre asks states to expedite stimulus spending

A day after the central government announced a Rs30,000 crore hike in states' borrowing limit, it asked state governments to give special attention to the implementation of schemes and expedite public expenditure aimed at fighting the global slowdown.

Cabinet secretary K M Chandrasekhar who held a review meeting with state chief secretaries on the stimulus packages, said the prime minister had written to state chief ministers on the need for a proactive approach.

''The prime minister had written that special attention should be paid on the implementation of various schemes in the state, the implementation and expenditure should be through the states,'' he said.

''It is very important that the speed of expenditure should be increased, chief ministers have to play very important role to ensure that there is sufficient progress of these schemes all over the country,'' he added.

The centre and the Reserve Bank of India have suggested measures to inject liquidity into the system for beating the slowdown.

He stressed the need for allocating cheap land for housing of lower-and middle-income groups as rising urbanisation has left thousands homeless.

''States are being allowed to raise additional market borrowings of 0.5 per cent of the Gross State Domestic Product, amounting to Rs 30,000 crore for all states for capital expenditure. Some states such as Andhra Pradesh, Punjab and Kerala are active about it and others should also come forward,'' Chadrasekhar said.

The centre had, on Thursday, raised the borrowing limit for states and relaxed debt relief guidelines, allowing states to borrow an additional Rs30,000 crore to step up capital expenditure and thereby operationalising the second stimulus package to boost the economy.

''Consistent with recommendations of the Third Finance Commission (TFC), the finance ministry has allowed states to borrow up to 3 per cent of their respective GSDP during the year 2008-09. States that are on the fiscal correction path recommended by TFC get debt relief as recommended by the TFC,'' a government press release said.