States Current Obligation to borrow from National Small Savings Fund
NSSF was launched in 1999 to credit money of all small savings schemes of the Union Government under one head. This fund is a part of Public Account of India. The money from this account is invested in various securities of states and central governments. The states were not only allowed to borrow from it but had been given an obligation to borrow from NSSF. However, after recommendations of Finance Commission, this obligation was brought down from 100% to 80% of net collections from the state. Since the NSSF loan came at a higher rate that market rates, the FC recommended to do away from this obligation. Current position is as follows:
- All states and UTs except Arunachal Pradesh, Kerala, Delhi (UT) and Madhya Pradesh are not requirement to borrow from National Small Savings Fund (NSSF) investments.
- Arunachal Pradesh will be given loans to the tune of 100% of NSSF collections within its territory, while Kerala, Madhya Pradesh and Delhi (UT) will be provided with 50% of collections.