Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.
Scheme of Financial Assistance to States for Capital Expenditure:
The Ministry of Finance, Government of India has decided to provide an additional amount of upto ₹15,000 crore to States as interest free 50 year loan for spending on capital projects.
- 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.
Allocation under the scheme:
- The first part of scheme is for North-east and hill states and an amount of ₹2,600 crore has been earmarked.
- The second part of scheme is for all other states with an amount of ₹7,400 crore. This amount has been allocated among states in proportion to their share of central taxes as per the award of 15th Finance Commission for 2021-22.
- The third part of scheme is for providing incentives to states for monetisation or recycling of infrastructure assets and disinvestment of state public sector enterprises. An amount of ₹5,000 crore is allocated.
Under the scheme, financial assistance is provided to state governments in the form of 50-year interest free loan.
- An amount not exceeding ₹12,000 crore was earmarked for 2020-21 and a sum of ₹11,830.29 crore was released.
- This helped to sustain state level capital expenditure in the pandemic year.
Sources: the Hindu.