Special Assistance To States For Capital Expenditure Scheme

Special Assistance To States For Capital Expenditure Scheme

Part of: GS Prelims and GS-III – Economy

In news

• All the states except Tamil Nadu have availed benefits of the newly announced scheme for Special Assistance to States for Capital Expenditure.

Key takeaways

• The scheme was announced as a part of the Aatmanirbhar Bharat package.
• Aim: 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 enhances the future productive capacity of the economy, and results in a higher rate of economic growth.
• The government had announced that the Centre will offer Rs. 12,000 crore special interest-free 50-year loan to states, exclusively for capital expenditure.
• Parts of the scheme: (1) Part–I of the scheme covers the north-eastern region (Rs. 200 crores); (2) Part-II is for all other States (Rs. 7500 crores); (3) Part-III of the scheme is aimed at pushing various citizen-centric reforms in the States.
• Under Part III, an amount of Rs. 2000 crores is earmarked.
• This amount will be available only to those States which carry out at least three out of the four reforms specified by the Ministry of Finance.
• Four Reforms: One nation one ration card, ease of doing business, urban local body/ utility reform and power sector reforms.
• As of now, Rs. 4,939.81 crore has been released as the first instalment out of Rs. 9,879.61 crore worth of capital expenditure proposals of 27 States.