Special Assistance to States for Capital Expenditure
On October 12, 2020, the Finance Minister announced ‘Special Assistance to States for Capital Expenditure’, as a part of the Aatma Nirbhar Bharat package. The Central Government had announced that it will offer special interest-free 50-year loans to states worth Rs 12,000 crore, exclusively for capital expenditure.
Key Points for UPSC Prelims
- The scheme aims to boost the capital expenditure by the State governments which are at financial crunches, due to the shortfall in tax revenue amidst the Covid-19 pandemic.
- As per the Ministry of Finance, capital expenditure proposals of Rs 9,879.61 crore of 27 states have been approved. All states except Tamil Nadu have availed benefits of the new scheme, as of now.
- Around 5000 crores have already been released to the states as the first installment under the scheme.
Special Assistance to States for Capital Expenditure Scheme
The capital expenditure loan scheme has three parts. In the first part, northeastern states are covered. Seven northeastern states namely- Tripura, Arunachal Pradesh, Nagaland, Manipur, Sikkim, Mizoram, and Meghalaya have been allocated Rs 200 crore. Assam has been allocated Rs 450 crore.
In part II of the scheme, all other states are included. For this, Rs 7500 has been set aside.
Lastly, in Part III of the scheme, citizen-centric reforms in the state will be encouraged. Under this, Rs 2000 crore is designated for states that carry at least 3 out of 4 reforms specified by the Ministry of Finance (ease of doing business reform, one nation one ration card, power sector reform, and urban local body reform).
It is a vision first mentioned by PM Modi on May 12, 2020, while launching the economic package for COVID-19. As the word translates to “Self-reliant India”, the vision of the PM wants India to be self-reliant and not dependent on others. PM Modi also called for being “Vocal for Local” which means promoting local products.
Written by IAS POINT