Context: The Department of Expenditure, Ministry of Finance, Government of India, has approved capital investment proposals of Rs. 56,415 crore in 16 States in the current financial year. Approval has been given under the scheme entitled ‘Special Assistance to States for Capital Investment 2023-24’.
About the Scheme
- In view of a higher multiplier effect of capital expenditure and in order to provide a boost to capital spending by States, the scheme ‘Special Assistance to States for Capital Investment 2023-24′ was announced in the Union Budget 2023-24.
- Under the scheme, special assistance is being provided to the State Governments in the form of 50-year interest free loan for capital investment projects up to an overall sum of Rs. 1.3 lakh crore during the financial year 2023-24.
Components of the Scheme
- Part I: It is the largest part having the allocation of Rs. 1 lakh crore. This amount has been allocated amongst States in proportion to their share of central taxes & duties as per the award of the 15th Finance Commission. Other parts of the scheme are either linked to reforms or are for sector specific projects.
- Part II: In this part of the scheme, an amount of Rs. 3,000 crore has been set aside for providing incentives to States for scrapping of State Government vehicles and ambulances, waiver of liabilities on old vehicles, providing tax concessions to individuals for scrapping of old vehicles and setting up of automated vehicle testing facilities.
- Part III & IV: This part aims 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.
- Part V: This aims at increasing the housing stock for the police personnel and their families within the police stations in urban areas. An amount of Rs. 2,000 crore is earmarked for this purpose under the scheme.
- Part VI: Another objective of the Scheme is to promote national integration, carry forward the concept of “Make in India” and promote the concept of “One District, One Product (ODOP)” through construction of Unity Mall in each State. An amount of Rs. 5,000 crore has been set aside for this purpose under the scheme.
- Part-VII: of the Scheme, with an allocation of Rs. 5,000 crore is for providing financial assistance to States for setting up libraries with digital infrastructure at Panchayat and Ward level for children and adolescents.
- Part VIII of the scheme incentivises States for implementation of “Just-in-Time” release of Centrally Sponsored Schemes (CSS) funds by State Government to vendors and beneficiaries using RBI’s e-Kuber Model and for timely release of Central & State share of funds to Single Nodal Agency accounts.
Conditions to be Fulfilled by States
The scheme guidelines include mandatory conditions which the States need to fulfil in order to avail benefits under any Part of the Scheme. These are:
- Full compliance with the official name of all CSSs and any guidelines/instructions issued by the Government of India regarding branding of CSSs, in all schemes of all ministries. However, correct translation of the official name of CSSs in local language is permitted.
- Integration of State treasuries with Public Finance Management System (PFMS) and exchange of data between State treasuries and PFMS in respect of all State Linked Scheme for CSS in a state for which the state has received funds from the Central Government in the past 21 days.
- Deposit of central share of interest earned in Single Nodal Agency accounts till 31st March, 2023 in the Consolidated Funds of India and submission of certificate to this effect in the format, signed by the Finance Secretary of the State Government.
