Centre approves Rs 56k cr in capex assistance to 16 states

The central government has approved capital expenditure support of Rs 56,415 crore to 16 states for projects in health, education, irrigation, water supply, power and roads. This is the first tranche of the Rs 1.3 lakh crore long-term, interest-free capex loans to states, announced by Finance Minister Nirmala Sitharaman in union budget 2023-24.

Karnataka has got approval for Rs 3,647 crore so far. The highest amount has been approved for Bihar at Rs 9,640 crore, as per data released by the union finance ministry on Monday.

The second highest amount of Rs 7,850 crore has been approved for poll-bound Madhya Pradesh. It is followed by West Bengal at Rs 7,523 crore; Rajasthan at Rs 6,026 crore; Odisha at Rs 4,528 crore; and Tamil Nadu at Rs 4,079 crore.

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The amount has been allocated amongst states in proportion to their share of central taxes and duties as per the award of the 15th Finance Commission, the Finance Ministry said in a statement.

“Other parts of the scheme are either linked to reforms or are for sector specific projects,” it said.

The scheme named ‘Special Assistance to States for Capital Investment 2023-24' has eight parts, Part-I being the largest with allocation of Rs 1 lakh crore. 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 government vehicles.

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 was first instituted by the Ministry of Finance in 2020-21 in order to provide financial assistance to states in the wake of COVID-19 pandemic. During the financial year ended March 2023, capital investment proposals of Rs 95,147.19 crore were approved and an amount of Rs 81,195.35 crore was released to the states.