Govt. approves Rs.56,415 crore to 16 States for Capital Investment

The Department of Expenditure, Ministry of Finance, Government of India, has approved capital investment proposals of Rs. 56,415 crore in 16 States in the current financial year. Approval has been given under the scheme entitled ‘Special Assistance to States for Capital Investment 2023-24’.

Capital investment projects in diverse sectors have been approved including health, education, irrigation, water supply, power, roads, bridges and railways. Funds for meeting the State share of Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana have also been provided to the States under this scheme to enhance pace of the projects in these sectors.

The scheme known as ‘Special Assistance to States for Capital Investment 2023-24’ was proposed in the Union Budget 2023-24 in response to a stronger multiplier impact of capital expenditure and to promote capital investment by states. The initiative provides exceptional support to state governments in the form of a 50-year interest-free loan up to a total of Rs. 1.3 lakh crore for the financial year 2023-24.

The scheme has eight parts, Part-I being the largest with allocation of Rs. 1 lakh crore. This amount has been allocated amongst States in proportion to their share of central taxes & duties as per the award of the 15th Finance Commission. Other parts of the scheme are either linked to reforms or are for sector specific projects.

In Part–II of the scheme, an amount of Rs. 3,000 crore has been set aside for providing incentives to States for scrapping of State Government vehicles and ambulances, waiver of liabilities on old vehicles, providing tax concessions to individuals for scrapping of old vehicles and setting up of automated vehicle testing facilities. Part–III & IV of the scheme aim at providing incentives to States for reforms in Urban Planning and Urban Finance. An amount of Rs. 15,000 crore is earmarked for Urban Planning Reforms, while additional Rs. 5,000 crore is for incentivising the States for making Urban Local Bodies creditworthy and improving their finances.

The scheme also intends to increase the housing supply for police officers and their families within metropolitan police stations. Part-V of the project has a budget of Rs. 2,000 crore for this purpose.

Another objective of the Scheme is to promote national integration, carry forward the concept of “Make in India” and promote the concept of “One District, One Product (ODOP)” through construction of Unity Mall in each State. An amount of Rs. 5,000 crore has been set aside for this purpose under the Part-VI of the scheme.

Part-VII of the Scheme, with a budget of Rs. 5,000 crore, provides financial support to states for the establishment of libraries with digital infrastructure for children and adolescents at the Panchayat and Ward levels.

The Ministry of Finance had carried out a similar plan dubbed ‘Special Assistance to States for Capital Investment for 2022-23′ in the previous financial year. In the previous financial year, the programme accepted Capital Investment bids of Rs. 95,147.19 crore and distributed Rs. 81,195.35 crore to the states.

The scheme for financial assistance to States for capital investment/expenditure, first instituted by the Ministry of Finance in 2020-21 in the wake of COVID-19 Pandemic have given a very timely boost to capital spending by States. The flexibility and simplicity of the scheme design has earned liberal praise from Chief Ministers and Finance Ministers of States in successive pre-budget consultations.

State-wise amount approved is as under: –