The Department of Expenditure under the Ministry of Finance has allowed extra borrowing of Rs 60,876.80 crore to 22 states for contribution to National Pension System (NPS) for 2023-24. In a post on Tuesday on social media platform X, formerly Twitter, the Ministry said this extra borrowing would be allowed over and above the net borrowing ceiling for this fiscal.

The normal net borrowing ceiling for states is fixed at 3 per cent of the Gross State Domestic Product (GSDP) or Rs 8,59,988 crore in absolute terms for FY24 as recommended by the Fifteenth Finance Commission. Additional borrowing of 0.5 per cent of GSDP linked to performance in power sector is also permitted to states. States are eligible to borrow Rs 1.43 lakh crore on the recommendation of the power ministry in FY24.

States have been allowed extra borrowing ceiling equivalent to employer and employee share of contribution of its employees to the NPS over and above the normal net borrowing ceiling of 3 per cent of GSDP for FY24. “Extra borrowing ceiling of Rs 60,876.80 crore allowed to 22 states in 2023-24 (as on October 27, 2023) for NPS contribution by complying states,” the ministry said.

States have the provision of tapping into the Rs 1.3 lakh crore 50-year interest-free capex loans facility for FY24. Capital expenditure of Rs 91,471.43 crore has been approved for 25 states, out of which Rs 57,090.39 crore has been released to eligible states, the ministry said.

In the backdrop of some states opting to return to Old Pension Scheme (OPS), the Centre had offered this additional borrowing limit equivalent to NPS contribution in FY23 also to encourage states to remain in the NPS. As per data shared by Finance Ministry in Parliament last week, total number of subscribers under NPS, including central government, state government, and corporates is 1,06,69,257 as on October 31. The total number of central government pensioners were 67.95 lakh as on October 31.

The state governments of Rajasthan, , Jharkhand, Punjab, and Himachal Pradesh have informed the central government or the Pension Fund Regulatory and Development Authority (PFRDA) about their decision to revert to OPS for their state government employees. “These state governments have requested for withdrawal/refund of contribution along with return thereon. However, the Government of Punjab has also informed the Government of India that it continues to pay staff and Government contributions to the NPS,” the ministry had said in its reply.