Indian government rewards states for completing citizen-centric reforms

Our Correspondent
Kohima, Jan. 6 (EMN): The department of Expenditure, Ministry of Finance, has announced an additional financial assistance of INR 1004 crore to Madhya Pradesh and Andhra Pradesh states under the newly launched scheme “special assistance to states for capital expenditure” as a reward for completing three out of four citizen-centric reforms stipulated by the department.

The two states have completed three reforms — one nation one ration card, ease of doing business, and urban local body/utility – leaving only power sector reform. For this achievement, Andhra Pradesh has been rewarded with an additional financial assistance of INR 344 crore and Madhya Pradesh, INR 660 crore. This is in addition to the permission of INR 14694 crore issued to these states for extra borrowings for completing the reforms.

The update went on to inform that the ministry of Finance has approved proposals of INR 9880 crore for 27 states, including Nagaland, under “Special Assistance to States for Capital Expenditure” scheme, with an aim to boost capital expenditure by state governments that are facing ‘difficult financial environment’ due to the shortfall in tax revenue arising from the Covid-19 pandemic.

Out of the total approved amount, INR 4940 crore has already been released to the states as the first instalment. However, the update said that Tamil Nadu has not availed the benefit of the scheme.

An amount of INR 200 crore has been approved for Nagaland under this scheme but only INR 100 crore has been released to the state.

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

The scheme has three parts, with the first covering the north-eastern and hill states.  Under this part, INR 200 crore each has been allocated to seven north-eastern states — Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim and Tripura — and INR 450 crore each to the hill states — Himachal Pradesh and Uttarakhand.  In view of higher population and geographical area, Assam has been provided an enhanced allocation of INR 450 crore under the scheme.

For part two of the scheme, which covers other states not included in part one, an amount of INR 7,500 crore has been earmarked and allocated to each 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 three of the scheme is aimed at pushing various citizen-centric reforms in the states.  Under this part, an amount of INR 2000 crore has been earmarked for states that carried out at least three out of four reforms specified by the Ministry of Finance, by December 31, 2020.