India plan panel for raising state borrowing limit

NEW DELHI, June 26 - India's Planning Commission has recommended to the finance ministry to increase states' borrowing limit by another 0.5 percentage point to 4 percent of state gross domestic product, a policy advisor said on Friday.

Montek Singh Ahluwalia, deputy head of the Planning Commission, also said the fiscal deficit rules of states need to be changed to allow them to borrow more.

"We recognise this is an exceptional year. Earlier they had agreed 3.5 percent. We are recommending to the finance ministry that they should agree for another half a percent," he told reporters.