All 27 states, except Tamil Nadu, have availed benefits of the newly announced scheme for special assistance to states for capital expenditure under the government's Atma Nirbhar Bharat Abhiyan package. Finance Minister Nirmala Sitharaman had announced the scheme on October 12.
The scheme is aimed at boosting capital expenditure by states facing a difficult financial crunch due to the shortfall in tax revenue in the wake of COVID 19 pandemic. The centre has extended the special assistance to states in respect of capital expenditure in FY21.
So far, capital expenditure proposals of Rs 9,879.61 crore of 27 states have been approved by the finance ministry, of which over Rs 4,939.81 crore has already been released to states as the first instalment.
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.
The scheme has three parts. The first part covers the north-eastern region, under which Rs 200 crore has been allocated to seven north-eastern states, Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim and Tripura. Assam has been allocated Rs 450 crore under the scheme.
The second part states include states not included in Part I, under which over Rs 7,500 crore has been earmarked. The amount has been allocated among these states in proportion to their share of central tax as per the interim award of the 15th Finance Commission for 2020-21.
Part-III is aimed at pushing various citizen-centric reforms in the states. Under this, Rs 2,000 crore is earmarked for states that carry out at least three out of the four reforms specified by the finance ministry on May 17 with regard to reform linked additional borrowing permissions. The 4 reforms are -- one nation one ration card, ease of doing business reform, urban local body/ utility reform and power sector reform.
Notably, capital expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economic growth.