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Mahesh

28/06/23 12:16 PM IST

Centre approves ₹56,415 crore as interest-free, long-term capex loans to 16 state

In News
  • The central government on Monday approved ₹56,415 crore in interest-free and long-term capital expenditure loans to 16 states for fiscal 2023-24.
Special Assistance Scheme
  • The Special Assistance to States for Capital Investment 2023-24 scheme was unveiled in the Union Budget as a means to bolster capital spending by states.
  • Under this scheme, states are provided interest-free loans amounting to a total of Rs 1.3 lakh crore during the financial year.
  • The objective is to empower states and support their initiatives for infrastructure development and sectoral advancements. 
  • Under this initiative, state governments are provided interest-free loans for a duration of 50 years, amounting to a total sum of ₹1.3 trillion for the fiscal year 2023-24.
  • Of the total allocation, Bihar has secured the highest amount at ₹9,640 crore, followed by Madhya Pradesh at ₹7,850 crore, West Bengal with ₹7,523 crore, Rajasthan with ₹6,026 crore, and Odisha obtaining ₹4,528 crore.
  • Capital investment projects in diverse sectors have been approved including health, education, irrigation, water supply, power, roads, bridges and railways.
  • The scheme comprises eight parts, with Part-I being the largest, receiving an allocation of ₹1 trillion.
  • The distribution of this amount among the states is based on their respective shares of central taxes and duties, as determined by the 15th Finance Commission.
  • Other components of the scheme are either linked to reforms or target specific projects in various sectors.
  • Part-II of the scheme has set aside ₹3,000 crore for offering incentives to states for scrapping of state government vehicles and ambulances, waiving liabilities related to old vehicles, providing tax concessions to individuals for disposing of old vehicles, and establishing automated vehicle testing facilities.
  • Part-III and Part-IV focus on incentivizing states for urban planning reforms and urban finance reforms, with allocations of ₹15,000 crore and an additional ₹5,000 crore, respectively.
  • The scheme aims to enhance housing facilities for police personnel and their families within urban police stations, with an allocation of ₹2,000 crore under Part-V.
  • It also aims to promote national integration and the “Make in India" concept by constructing Unity Malls in each state, with ₹5,000 crore earmarked under Part-VI.
  • Part-VII of the scheme allocates Rs. 5,000 crore to provide financial assistance to states for establishing libraries with digital infrastructure at the Panchayat and Ward levels, catering specifically to children and adolescents.
Background
  • In FY23, the ministry of finance implemented a similar scheme called ‘Special Assistance to States for Capital Investment for 2022-23’.
  • Under that scheme, capital investment proposals amounting to ₹95,147.19 crore were approved, and an amount of ₹81,195.35 crore was disbursed to the states.
  • The scheme for financial assistance to states for capital investment/expenditure, introduced by the Centre in 2020-21 amid the coronavirus pandemic, has played a vital role in stimulating capital spending by the states.
  • The scheme’s flexible and straightforward design has garnered significant praise from chief ministers and finance ministers during successive pre-budget consultations.
Source- Live Mint

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