News Update

Centre allocates addl Rs 660 Cr to MP for capital projects

By TIOL News Service

NEW DELHI, JAN 25, 2021: MADHYA Pradesh on Sunday became the first State to receive additional funds for capital projects for successfully carrying out citizen-centric reforms mandated by the Finance Ministry's Department of Expenditure.

"A list of capital projects with estimated cost of Rs. 660 crore was approved by the Department of Expenditure. Fifty per cent of the approved amount (i.e., Rs. 330 crore) has also been released to the State as first instalment for the approved projects," the ministry said.

The State's allocated amount of Rs. 660 crore is for capital expenditure for undertaking the 'One Nation One Ration Card' reforms, ease of doing business reforms, and urban local bodies reforms. MP has also partially completed the fourth reform in the power sector.

The 'special assistance to States for capital expenditure' was announced by the Finance Minister Ms Nirmala Sitharaman in October, 2020 as part of the Aatmanirbhar Bharat package. The Scheme aims at boosting capital expenditure by the State governments who are facing financial difficulties due to a shortfall in tax revenue arising from the COVID-19 pandemic.

"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, despite the adverse financial position of the Central government, it was decided to extend a special assistance to the State governments in respect of capital expenditure, in financial year 2020-21," the ministry stated.

So far, capital expenditure proposals of Rs. 10,657 crore from 27 States have been approved by the Ministry of Finance and Rs. 5,328 crore has already been released as the first instalment.

"Tamil Nadu has not availed the benefit of the scheme," it added.

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

The scheme has three parts with the first designating Rs. 650 crore to the Northeastern and Hill States, along with Rs. 450 crore to Assam. The second part is for all other States, with Rs. 7,500 earmarked for them in proportion to their share of central tax. The third part pushes citizen-centric reforms in the four areas with Rs. 2,000 crore earmarked for those who carry out at least three of the four specifies reforms.