Centre approves Rs. 56,415 Crore for capital investment in 16 states

The Ministry of Finance under its department of expenditure, has for the current financial year approved capital investment proposals to the tune of Rs. 56,415 crore. To be invested in 16 states,  this amount has been approved under the ‘Special Assistance to States for Capital Investment 2023-24’ scheme. The scheme aims to provide a timely boost to state capital spending.

The allocated amounts for each state are as following: Arunachal Pradesh: Rs. 1,255 crore, Bihar: Rs. 9,640 crore, Chhattisgarh: Rs. 3,195 crore, Goa: Rs. 386 crore, Gujarat: Rs. 3,478 crore, Haryana: Rs, 1,093 crore, Himachal Pradesh: Rs. 826 crore, Karnataka: Rs. 3,647 crore, Madhya Pradesh: Rs. 7,850 crore, Mizoram: Rs. 399 crore, Odisha: Rs. 4,528 crore, Rajasthan: Rs. 6,026 crore, Sikkim: Rs. 388 crore, Tamil Nadu: Rs. 4,079 crore, Telangana: Rs. 2,102 crore and West Bengal: Rs. 7,523 crore.

The ministry has approved capital investment projects across the sectors, including education, health, education, water supply, irrigation, roads, power, railways and bridges. Additionally, funds have been allocated to states to meet their share of the Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana, thereby accelerating projects in these sectors.

It was in the Union Budget 2023-24, the government had introduced Special Assistance to States for Capital Investment 2023-24 to encourage state capital spending and to leverage its higher multiplier effect. Under this scheme, state governments receive special assistance in the form of a 50-year interest-free loan, amounting to a total of Rs. 1.3 lakh crore during the financial year 2023-24.

Consisting eight parts the scheme has been allocated Rs. 1 lakh crore and this amount has been distributed among the states based on their share of central taxes and duties. Other parts of the scheme are linked to reforms or focus on specific sector projects.

Part-II of the scheme sets aside Rs. 3,000 crore as incentives to states for scrapping government vehicles, including ambulances, waiving liabilities on old vehicles, providing tax concessions to individuals for scrapping old vehicles, and establishing automated vehicle testing facilities. Part-III and Part-IV provide incentives to states for urban planning and urban finance reforms, with Rs. 15,000 crore earmarked for urban planning reforms and an additional Rs. 5,000 crore for incentivizing creditworthiness and improving finances of urban local bodies.

Furthermore, the scheme aims to increase the housing stock for police personnel and their families within urban police stations, allocating Rs. 2,000 crore under Part-V. The scheme also supports national integration, the “Make in India” initiative, and the “One District, One Product (ODOP)” concept through the construction of Unity Malls in each state, with Rs. 5,000 crore allocated in Part-VI.

With an allocation of Rs. 5,000 crore, Part-VII of the scheme, provides financial assistance to states to set-up libraries equipped with digital infrastructure at Ward and Panchayat level to benefit adolescents as well as the children.

In the previous financial year, the Ministry of Finance executed a similar scheme called ‘Special Assistance to States for Capital Investment for 2022-23.’ Under this scheme, capital investment proposals worth Rs. 95,147.19 crore were approved, and Rs. 81,195.35 crore was released to the states.