Close on the heels of the Union government allowing the states to borrow up to five per cent of the state's GDP, the cabinet on Tuesday approved the decision to amend the Karnataka Fiscal Responsibility Act in order to borrow an additional Rs 33,000 crore in this fiscal year.

The proposed amendment will enable the Karnataka government to increase the borrowing limit from the present three per cent to five per cent of the GSDP (gross state domestic product), which can go up to Rs 36,000 crore. Recently, the Union Finance Minister had allowed this as a one-time measure for all the states in the country. Karnataka is one of the early states to take this route to mop-up revenues to meet its needs.