Telangana get additional assistance of Rs 179 cr for capital expenditure

at 12:52 pm
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New Delhi (NVI): The Ministry of Finance has approved capital expenditure of an additional amount of Rs 179 crore to Telangana, as an incentive for undertaking reforms in three out of the four citizen-centric areas.

This is in addition to the capital expenditure of Rs 179 crore approved in the state earlier.

In a official statement, the Finance Ministry said, “The state has completed the One Nation, One Ration Card Reforms, Ease of Doing Business Reforms and Urban Local Bodies Reforms.”

This projects have been approved by the Department of Expenditure under the newly launched scheme of “Financial Assistance to States for capital projects.”

Telangana has now become the second state to get additional funds under the scheme. Earlier, Madhya Pradesh was sanctioned additional capital expenditure of Rs 660 crore as an incentive for undertaking reforms in three out of four areas, the ministry said.

The citizen-centric areas identified by the government for undertaking reforms by the states are One Nation One Ration Card Reforms, Ease of Doing Business Reforms, Power Sector Reforms and Urban Local Bodies Reforms.

Out of the additional approved amount of Rs 179 crore, an amount of Rs 89.50 crore has been released to the State as 1st instalment. All the capital projects identified by the State government of Telangana to be taken up from the additional funds are in the road sector, the statement noted.

The scheme of “Special Assistance to States for capital expenditure was announced by the Finance Minister Niramala Sitharaman on October 12, 2020 as part of Aatma Nirbhar Bharat package.

It is aimed at boosting capital expenditure by the State governments who are facing difficult financial environment this year due to the shortfall in tax revenue arising from the COVID 19 pandemic.

The ministry also informed that, “Capital Expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economy growth.”

Therefore, the government had decided to extend the special assistance to the state governments despite the adverse financial position of the Centre.

“The Scheme has got very warm response from the State Governments. So far, capital expenditure proposals of Rs 10835.50 crore of 27 states have been approved by the Ministry of Finance. An amount of Rs 5417.70 crore has already been released to the states as the first instalment under the scheme,” the statement noted.

The capital expenditure projects have been approved in diverse sectors of economy like, health, rural development, water supply, roads and bridges, irrigation, power, transport, education, urban development.

Meanwhile, the scheme has three parts and Part–I covers the north-eastern and hill states. Under this part, Rs 200 crore is allocated to each of the 7 north-eastern states (Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim and Tripura) and Rs 450 crore is allocated to each of the hill States (Himachal Pradesh and Uttarakhand).

The next part of the scheme is for all other states not included in Part-I, the ministry said, adding that an amount of Rs 7,500 crore is earmarked for this part.

This amount has been allocated amongst these States in proportion to their share of central tax as per the interim award of the 15th Finance Commission for the year 2020-21.

“Part-III of the scheme is aimed at pushing various citizen-centric reforms in the states. Under this part, an amount of Rs 2,000 crore is earmarked,” the statement said.

This amount is available only to those States who carry out by February 15, 2021, at least 3 out of the 4 reforms specified by the ministry in its letter dated May 17, 2020 regarding reform linked additional borrowing permissions, it added.