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The finance ministry has said 10 states were given the permission to borrow an additional Rs 28,204 crore in last financial year (FY22) for undertaking power sector reforms. The 10 states are Andhra Pradesh, Assam, Himachal Pradesh, Manipur, Meghalaya, Odisha, Rajasthan, Sikkim, Tamil Nadu and Uttar Pradesh.

The ministry stated that in the financial year 2022-23 too, the states can avail the facility of additional borrowing linked to reforms in power sector. An amount of Rs 1,22,551 crore will be available as incentive to the states for undertaking these reforms in 2022-23.

The ministry, based on the recommendations of 15th Finance Commission, had decided to grant additional borrowing space of upto 0.5 per cent of the Gross State Domestic Product (GSDP) to the states every year for a four year period from 2021-22 to 2024-25 based on the reforms undertaken by them in the power sector.

The objective of granting financial incentives as additional borrowing permissions for taking up reforms in power sector are to improve the operational and economic efficiency of the sector, and promote a sustained increase in paid electricity consumption.