{"id":51638,"date":"2025-08-19T20:36:13","date_gmt":"2025-08-19T15:06:13","guid":{"rendered":"https:\/\/www.nextias.com\/ca\/?p=51638"},"modified":"2025-08-19T20:36:25","modified_gmt":"2025-08-19T15:06:25","slug":"off-budget-borrowings","status":"publish","type":"post","link":"https:\/\/www.nextias.com\/ca\/current-affairs\/19-08-2025\/off-budget-borrowings","title":{"rendered":"Off Budget Borrowings"},"content":{"rendered":"\n<p><strong>Syllabus:GS3\/Economy<\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Context<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Indian states are reducing reliance on off-budget borrowings, with the Centre tightening norms by including such loans within states\u2019 fiscal limits under <strong>Article 293(3) <\/strong>of the Constitution.\n<ul class=\"wp-block-list\">\n<li><strong>Article 293(3) <\/strong><strong>of the Constitution of India <\/strong>stipulates that a state cannot borrow money without the permission of the union government if it still owes a loan taken from or guaranteed by the union government.<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Off-Budget Borrowings<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Off-budget borrowing<\/strong> also known as extra budget financing is used by the government to finance its expenditures while keeping the debt off from its annual statement.\u00a0<\/li>\n\n\n\n<li>Such borrowings are <strong>not counted in the fiscal deficit calculation<\/strong>, even though they have fiscal implications.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>How are Off-Budget Borrowings Raised?<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>The government asks implementing agencies to raise required funds from the market through loans or by issuing bonds.\n<ul class=\"wp-block-list\">\n<li><strong>Public Sector Undertakings (PSUs) <\/strong>and<strong> Special Purpose Vehicles (SPVs)<\/strong> are commonly used to raise such funds.<\/li>\n<\/ul>\n<\/li>\n\n\n\n<li>These borrowings are typically directed towards subsidies, infrastructure, and welfare schemes.<\/li>\n\n\n\n<li><strong>Concern:<\/strong> Off-budget financing allows governments to bypass fiscal discipline mandated under the<strong> Fiscal Responsibility and Budget Management (FRBM) Act, 2003.<\/strong><\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Trends in Off-Budget Borrowings<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Off-budget borrowings surged during the pandemic and touched <strong>\u20b967,181 crore in FY 2020-21, <\/strong>before moderating to<strong> \u20b929,335 crore in FY 2024-25<\/strong>.<\/li>\n\n\n\n<li><strong>In FY 2024-25<\/strong>, the top four states with the highest off-budget borrowings were:\n<ul class=\"wp-block-list\">\n<li><strong>Maharashtra:<\/strong> \u20b913,990 crore<\/li>\n\n\n\n<li><strong>Karnataka:<\/strong> \u20b95,438 crore<\/li>\n\n\n\n<li><strong>Telangana:<\/strong> \u20b92,697 crore<\/li>\n\n\n\n<li><strong>Kerala:<\/strong> \u20b9983 crore<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><strong>Government Actions<\/strong><\/h2>\n\n\n\n<ul class=\"wp-block-list\">\n<li><strong>Centre\u2019s Restrictions:<\/strong> Since FY 2021-22, all off-budget loans via SPVs are treated as state borrowings and included in their net borrowing ceiling.<\/li>\n\n\n\n<li><strong>Discontinuation at Central Level: <\/strong>The Union Government stopped its own off-budget borrowings from FY 2022-23.<\/li>\n\n\n\n<li><strong>Special Assistance to States for Capital Investment (SASCI):<\/strong> Launched in FY 2020-21, it provides long-term, interest-free loans to states for infrastructure projects, encouraging them to shift away from opaque borrowings.<\/li>\n<\/ul>\n\n\n\n<p><strong>Source: <\/strong><a href=\"https:\/\/www.livemint.com\/news\/india\/states-off-budget-borrowing-fiscal-discipline-finance-ministry-debt-11755418569991.html\" rel=\"nofollow noopener\" target=\"_blank\"><strong>LM<\/strong><\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<h3><strong>Context<\/strong><\/h3>\n<li class=\"ms-5\">Indian states are reducing reliance on off-budget borrowings, with the Centre tightening norms by including such loans within states\u2019 fiscal limits under Article 293(3) of the Constitution.<\/li>\n<p><\/p>\n<h3><strong>Off-Budget Borrowings<\/strong><\/h3>\n<li class=\"ms-5\">Off-budget borrowing also known as extra budget financing is used by the government to finance its expenditures while keeping the debt off from its annual statement.\u00a0<\/li>\n<li class=\"ms-5\">Such borrowings are not counted in the fiscal deficit calculation, even though they have fiscal implications.<\/li>\n<p><a href=\"https:\/\/www.nextias.com\/ca\/current-affairs\/19-08-2025\/off-budget-borrowings\" class=\"btn btn-primary btn-sm float-end\">Read\u00a0More<\/a><\/p>\n","protected":false},"author":15,"featured_media":51659,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-51638","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-current-affairs"],"acf":[],"jetpack_featured_media_url":"https:\/\/wp-images.nextias.com\/cdn-cgi\/image\/format=auto\/ca\/uploads\/2025\/08\/off-budget-borrowings.png","_links":{"self":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/51638","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/comments?post=51638"}],"version-history":[{"count":2,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/51638\/revisions"}],"predecessor-version":[{"id":51680,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/posts\/51638\/revisions\/51680"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media\/51659"}],"wp:attachment":[{"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/media?parent=51638"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/categories?post=51638"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.nextias.com\/ca\/wp-json\/wp\/v2\/tags?post=51638"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}