Centre approves ₹56,415 cr for capital investment in 16 states

NEW DELHI: For the current financial year 2023-24, the Ministry of Finance has approved capital investment proposals of ₹56,415 crore in 16 states. The approval has been given under the ‘Special Assistance to States for Capital Investment 2023-24’ scheme.

The projects include diverse sectors including education, health, irrigation, power, water supply, infrastructure, and railways. This scheme will also provide funds for Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana to enhance the pace of the projects in these schemes.

This scheme was announced in the Union Budget 2023-24 in order to provide a boost to capital spending by states – in view of a higher multiplier effect of capital expenditure. The scheme also provides special assistance to the state governments, a 50-year interest-free loan up to an overall cost of ₹1.3 lakh crore during the financial year 2023-24.

The scheme has seven parts. Part I has the largest allocation of funds – ₹1 lakh crore. This amount has been allocated amongst states in proportion to their share of central taxes and duties as per the 15th Finance Commission’s recommendations. Other parts of the scheme are either linked to reforms or are for sector-specific projects.

In Part–II of the scheme, an amount of ₹3,000 crore has been set aside for providing incentives to states for the 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.

Parts III and IV of the scheme are aimed at providing incentives to states for reforms in urban planning and urban finance. An amount of ₹15,000 crore is earmarked for Urban Planning Reforms, while an additional ₹5,000 crore is for incentivising the states to make urban local bodies credit-worthy and to improve their finances.

Part V aims at increasing the housing stock for police personnel and their families within the police stations in urban areas. An amount of ₹2,000 crore is earmarked for this purpose.

Part VI of the scheme is to promote national integration, carry forward the concept of “Make in India” and also promote the concept of “One District, One Product (ODOP)” through the construction of Unity Mall in each state. An amount of ₹5,000 crore has been set aside for this purpose.

Part VII of the scheme, with an allocation of ₹5,000 crore, provides financial assistance to states for setting up libraries with digital infrastructure at Panchayat and Ward levels for children.

‘Special Assistance to States for Capital Investment for 2022-23′- a similar scheme was also implemented by the Ministry of Finance in the last financial year. Under the scheme, capital investment proposals of ₹95,147.19 crore were approved and an amount of ₹81,195.35 crore was released to the states in the last FY 2022-23.

The Ministry of Finance first implemented the scheme for financial aid to states for capital investment/expenditure in 2020–21 in response to the COVID–19 pandemic, and it has provided a very timely boost to the states’ capital spending. Chief Ministers and Finance Ministers of states have praised the scheme’s flexibility and simplicity during successive pre-budget meetings.

Table detailing state wise allocations:

Sl no.	State	Amount Approved in Rs (crore)
1	Arunachal Pradesh	1255
2	Bihar	9640
3	Chhattisgarh	3195
4	Goa	386
5	Gujarat	3478
6	Haryana	1093
7	Himachal Pradesh	826
8	Karnataka	3647
9	Madhya Pradesh	7850
10	Mizoram	399
11	Odisha	4528
12	Rajasthan	6026
13	Sikkim	388
14	Tamil Nadu	4079
15	Telangana	2102
16	West Bengal	7523