Indian Economy News

The centre has approved US$ 6.88 billion (Rs. 56,415 crore) to 16 States for capital investment under the ‘Special Assistance to States for Capital Investment 2023-24’ Scheme for giving a timely boost to capital spending by States

In the current fiscal year, the Department of Expenditure, Ministry of Finance, Government of India, has approved capital investment projects totalling US$ 6.88 billion (Rs. 56,415 crore) in 16 States. The approval has been given to the ‘Special Assistance to States for Capital Investment 2023-24' scheme.

Bihar received the highest approval of amount US$ 1.17 billion (Rs. 9,640 crore), followed by Madhya Pradesh US$ 957.7 million (Rs. 7,850 crore), and West Bengal US$ 917.8 million (Rs. 7,523 crore)

A wide range of capital investment projects have been approved, including those in the fields of health, education, irrigation, water supply, power, highways, bridges, and railways. To speed up the pace of the projects in these sectors, funds have also been provided to the States under this programme to cover their state contributions to the Jal Jeevan Mission and the Pradhan Mantri Gramme Sadak Yojana.

The ‘Special Assistance to States for Capital Investment 2023-24' scheme was announced in the Union Budget 2023-24 considering a higher multiplier effect of capital expenditure and to encourage capital spending by States. According to the scheme, the State Governments will receive special assistance in the form of a 50-year interest-free loan up to an overall sum of US$ 16 billion (Rs. 1.3 lakh crore) during FY24.

The scheme has eight parts, with Part-I being the largest with the allocation of US$ 12 billion (Rs. 1 lakh crore) (in proportion to their share of central taxes and duties as per the award of the 15th Finance Commission), followed by the allocation of US$ 366 million (Rs. 3,000 crore) for Part-II (for providing incentives to States for scrapping of State Government vehicles and ambulances). Parts-III and IV of the scheme are aimed at providing incentives to States for reforms in Urban Planning and Urban Finance (allocation of US$ 1.83 billion (Rs. 15,000 crore) with an addition of US$ 610 million (Rs. 5,000 crore)). An amount of US$ 244 million (Rs. 2,000 crore) is allocated for this increasing the housing stock for the police personnel and their families, under Part-V of the scheme. Allocation of US$ 610 million (Rs. 5,000 crore) has been done under Part-VI of the scheme to carry forward the concept of ‘Make in India’ and promote the concept of ‘One District, One Product’, through the construction of Unity Mall in each state. With an allocated amount of US$ 610 million (Rs. 5,000 crore), Part-VII of the Scheme provides financial support to States for the establishment of youth-focused digital libraries at the Panchayat and Ward levels.

The Ministry of Finance carried out a similar scheme called ‘Special Assistance to States for Capital Investment for 2022-23' during the previous fiscal year. The scheme witnessed the approval of capital investment projects worth US$ 11.60 billion (Rs. 95,147.19 crore).

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.