Rs 11,830 crore released to States under the scheme "Special Assistance to States for Capital Expenditure"

Finance Ministry has released an amount of Rs 11,830 crore to States under the scheme - Special Assistance to States for Capital Expenditure. The scheme was announced on October 12, 2020, as part of the Aatma Nirbhar Bharat package.

The scheme is aimed at boosting capital expenditure by the State Governments who were facing a difficult financial environment due to a shortfall in tax revenue arising from the COVID-19 pandemic. Capital Expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economic growth. Therefore, despite the adverse financial position of the Central Government, it was decided to extend special assistance to the State Governments in respect of capital expenditure, in the financial year 2020-21. The scheme has been continued in the year 2021-22 as well.

The Ministry said, the scheme has got a very warm response from the State Governments. Capital expenditure proposals of Rs 11,912 crore of 27 States were approved under the scheme by the Department of Expenditure. The capital expenditure projects have been approved in diverse sectors of the economy, like Health, Rural Development, Water Supply, Irrigation, Power, Transport, Education and Urban Development.

Special Assistance to States for Capital Expenditure Scheme has three parts:

• Part–I of the scheme covers the north-eastern and hill States. Rs 2500 crore were allocated under this part to the 9 North East and the Hill States under this part.

• Part-II of the scheme is for all other States not included in Part-I. An amount of Rs 7,500 crore was earmarked for this part. This amount has been allocated amongst these States in proportion to their share of central tax as per the interim award of the 15th Finance Commission for the year 2020-21.

• Part-III of the Scheme is aimed at pushing various citizen-centric reforms in the States. Under this Part, an amount of Rs 2000 crore was earmarked. This amount was available to those states that carry out at least 3 out of the 4 reforms specified by the Ministry of Finance in its letter dated May 17, 2020.

The reforms were to be certified by the nodal ministry concerned.

The 4 reforms are - One Nation One Ration Card, Ease of Doing Business Reform, Urban Local Body/ Utility Reform and Power Sector Reform. 11 States qualified under this part and were given enhanced allocation under Part-III of the scheme.