New Delhi: Madhya Pradesh and Andhra Pradesh have become the first group of States to complete three out of the four citizen-centric reforms stipulated by the Department of Expenditure, Ministry of Finance. The two States have completed the One Nation, One Ration Card Reforms, Ease of Doing Business Reforms, and Urban Local Bodies Reforms.
The Department of Expenditure, Ministry of Finance has decided to provide additional financial assistance amounting to Rs.1004 crore to these States under the newly launched Scheme of “Special Assistance to States for Capital Expenditure”.
Andhra Pradesh will get an additional amount of Rs.344 crore while Madhya Pradesh has become entitled to receive Rs.660 crore for capital projects. The Scheme was announced by the Finance Minister on 12th October 2020 as part of the Aatmanirbhar Bharat package. The additional financial assistance for the capital expenditure is in addition to the permission of Rs.14694 crore issued to these States for extra borrowings for completing the reforms.
The Scheme of “Special Assistance to States for Capital Expenditure” is aimed at boosting capital expenditure by the State Governments who are facing a difficult financial environment this year due to the 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 a special assistant to the State Governments in respect of capital expenditure, in the financial year 2020-21.
So far capital expenditure proposals of Rs.9880 crore of 27 States have been approved by the Ministry of Finance. An amount of Rs.4940 crore has already been released to the States as the first installment under the Scheme. State-wise allocation, approval granted, and funds released are attached. Tamil Nadu has not availed the benefit of the Scheme.
The capital expenditure projects have been approved in diverse sectors of the economy like Health, Rural Development, Water Supply, Irrigation, Power, Transport, Education, Urban Development.