AP, MP gets Rs 1,004 cr capex boost for completing reforms

New Delhi: Madhya Pradesh and Andhra Pradesh have become the first group of states to complete three out of the four citizen centric reforms stipulated by the Finance Ministry for getting additional borrowing rights for capital expenditure.

The two states have completed the One Nation, One Ration Card Reforms; Ease of Doing Business Reforms; and Urban Local Bodies Reforms.

Consequent upon completion of reforms in the three sectors, the Department of Expenditure has decided to provide additional financial assistance amounting to Rs 1,004 crore to these States under the newly launched Scheme of "Special Assistance to States for Capital Expenditure".

Andhra Pradesh will get an additional amount of Rs 344 crore while Madhya Pradesh has become entitled to receive Rs 660 crore for capital projects.

The capex scheme was announced by the Finance Minister on October 12, 2020 as part of Aatma Nirbhar Bharat package. The additional financial assistance for the capital expenditure is in addition to the permission of Rs 14,694 crore issued to these states for extra borrowings for completing the reforms.

The Scheme of "Special Assistance to States for Capital Expenditure" 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 good response from the State Governments. So far, capital expenditure proposals of Rs 9,880 crore of 27 states have been approved by the Ministry of Finance.