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Centre releases Rs 11,830 crore to states as special assistance for capex

BusinessToday.In     April 1, 2021

The Centre on Thursday said it has released Rs 11,830 crore to states under the 'Special Assistance to States for Capital Expenditure' scheme.

Finance Minister Nirmala Sitharaman had announced the scheme in October last year as part of 'Aatma Nirbhar Bharat' package to boost capital expenditure by state governments reeling under the financial impact of COVID-19 pandemic.

"The scheme has got 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 Finance Ministry said in a release.

The capital expenditure projects were approved in diverse sectors like health, rural development, water supply, irrigation, power, transport, education and urban development, it said.

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"Capital expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economy growth. Therefore, despite the adverse financial position of the central government, it was decided to extend a special assistance to the state governments in respect of capital expenditure in financial year 2020-21," the ministry said, adding that the scheme has been continued in the year 2021-22 as well.

While announcing the scheme, finance minister had said that the central government will issue a special interest-free 50-year loan of Rs 12,000 crore to states for capital expenditure.

The scheme has three parts -- part-I of the scheme covers the north-eastern and hill states and Rs 2,500 crore were allocated to these states. Part-II of the scheme is for all states not included in part-I, and an amount of Rs 7,500 crore was earmarked for these states.

Part-III of the scheme is aimed at pushing various citizen-centric reforms in the states and an amount of Rs 2,000 crore was earmarked for states who carry out at least three out of the four reforms specified by the Ministry of Finance -- one nation, one ration card, ease of doing business reform, urban local body/utility reform and power sector reforms. "11 States qualified under this part and were given enhanced allocation under part-III of the scheme," the release said.

(Edited by Rai Vinaykumar)

Also read: GST collections in March hit record Rs 1.23 lakh crore

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