With the states going under another lockdown because of the rising cases of Coronavirus, the Finance Ministry has decided to provide the state governments with an additional amount of up to Rs 15,000 crores interest-free as a 50-year loan for capital projects.
Finance Minister Pushes State Governments For Better Infrastructure
During the budget session, the Finance Minister said that the Central government would be taking measures to ensure that the state governments are encourage to develop better infrastructure. The Department of Expenditure has issued fresh guidelines in this regard on the “Scheme of Financial Assistance to States for Capital Expenditure” for the financial year 2021-22.
ALSO READ:-Roundup of Budget 2021-22: a promising budget but the key lies in execution
The capital expenditure is responsible for creating employment especially who are poor and unskilled. It further impacts the productive capacity of the economy and in future it would impact the economic growth. Following this, despite the financial situation India is currently going through, the Central Government has decided to launch a Scheme for Special Assistance to States for Capital Expenditure.
Under this scheme, this amount being given as financial assistance is an interest free loan for 50 years. An amount not exceeding Rs 12,000 crore was earmarked for the scheme for the financial year 2020-21, and a sum of Rs 11,830.29 crore was released to the states.
With the positive response received on the scheme, the finance ministry has decided to continue the scheme to 2021-22.
Scheme for Special Assistance to States for Capital Expenditure Three Part Explained
The scheme has three parts. The first part is for the North East and Hill States. An amount of Rs 2600 crores has been set aside for the part. The second part is for rest of the states that are not included in the first part. The amount is Rs 7400 crores. The third part includes providing incentives to states for disinvestment of the State Public Sector Enterprises (SPSEs) and monetisation/recycling of the infrastructure assets. A total of Rs 5000 crore has been allocated.
