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New Delhi : The Department of Expenditure, Ministry of Finance, has approved capital projects of an additional amount of Rs 179 crore  in Telangana.  This is in addition to the capital projects of Rs.179 crore approved in the State earlier.  Additional projects have been approved in the State as an incentive for undertaking reforms in three out of the four stipulated citizen-centric areas, i.e. One Nation One Ration Card, Ease of Doing Business, and Urban Local Bodies Reforms.  The projects have been approved under the newly launched scheme of “Financial Assistance to States for capital projects”.

Telangana has become the second State to get additional funds under the Scheme.  Earlier, Madhya Pradesh was sanctioned additional capital projects of Rs 660 crore as an incentive for undertaking reforms in three out of four stipulated areas.  The citizen-centric areas identified by the Government of India 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, according to a PIB release.

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

The Scheme 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.  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 Scheme has got very warm response from the State Governments. So far capital expenditure proposals of Rs 10,835.50 crore of 27 States have been approved by the Ministry of Finance.  An amount of Rs 5,417.70 crore has already been released to the States as the first instalment under the scheme.

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, and Urban Development.

The Scheme has three parts.  Part–I of the scheme 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).  In view of higher population and geographical area, the State of Assam has been provided enhanced allocation of Rs 450 crore under the scheme.

Part-II of the Scheme is, for all other States not included in Part-I. 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 2000 crore is earmarked.  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 of Finance in its letter dated May 17, 2020, regarding reform linked additional borrowing permissions.