Scheme of Special Assistance to States for Capital Investment

Context- Out of the Rs 1,67,518.6-crore special assistance (loan) allocated with the aid of the Centre under the Scheme for Special Assistance to States for capital expenditure/investment, Uttar Pradesh (UP) has been the highest recipient over the past four years.

What are the Trends in Capital expenditure as per the Ministry of Finance?

• UP and Bihar are the top two States which have fulfilled the criteria related to Capital Expenditure and received maximum allocation under the Scheme in the ultimate 4 years.
• Uttarakhand, Haryana, Kerala and Punjab are most of the States which have acquired about 1-2% of the overall released quantity under the Scheme.
• Andhra Pradesh, Kerala, Manipur and Punjab have not received any allocation in 2023-24 and as in line with the Ministry of Finance, these States have not met the eligibility criteria prescribed underneath the Scheme.

What is the Special Assistance to States for Capital Investment Scheme?

• About:

• • • The Scheme for Special Assistance to States for Capital Expenditure was launched in FY 2020-21 within the wake of Covid-19 Pandemic.
    • The scheme has been multiplied and persevered as ‘Scheme for Special Assistance to States for Capital Investment 2023-24’ with allocation of Rs 1.Three-lakh crore.

• Parts:

• • • The scheme has eight parts, Part-I being the biggest with allocation of Rs. 1 lakh crore. This amount has been allocated among states in percentage to their proportion of relevant taxes and duties as according to the award of the 15th Finance Commission.
    • Other elements of the scheme are either related to reforms or are for quarter-unique initiatives.
    • Part-II affords incentives to states for scrapping of vintage vehicles and putting in of automated car trying out facilities;
    • Part-III and IV provide incentives to states for reforms in city planning and concrete finance;
    • Part-V offers a budget for increasing the housing inventory for police employees and their families within the police stations in urban areas.
    • Part-VI of the scheme supports the vision of countrywide integration, Make in India and One District One Product by means of promoting cultural range and neighborhood merchandise through Unity Mall initiatives.
    • Under Part-VII, Rs. 5,000 crore is supplied as economic assistance to states for setting up libraries with virtual infrastructure at the Panchayat and Ward degree, normally benefiting youngsters and kids.

• Objectives of the Scheme:

• • The scheme is predicted to have a better multiplier impact on the economic system by using stimulating call for and growing jobs.
  • The scheme additionally ambitions to beautify the tempo of tasks in key sectors such as Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana through providing a budget for assembly the country percentage.
  • The scheme seeks to encourage states to undertake reforms in urban planning and urban finance to improve the quality of life and governance in cities.

What is Capital Expenditure in India?

• Capital Expenditure (Capex):

• • • It refers to the funds allotted with the aid of the government for the acquisition, creation, or improvement of bodily property including infrastructure, homes, machinery, and devices.
    • It is taken into consideration to be productive and improve as it adds to the effective potential of the financial system and generates earnings and employment inside the future.
    • The Indian government allocates capital expenditure through its annual budget, that is supplied via the finance minister.
    • The capital funding outlay has experienced a consecutive three-12 months boom, achieving Rs 10 lakh crore, which accounts for 3.3% of the GDP, marking a substantial boom of 33% ( Union Budget 2023-24).

• Effective Capital Expenditure:

• • The capital expenditure offered in the finances no longer consist of the spending by way of the authorities on growing capital property via offers-in-aid to states and other agencies.
  • These presents are categorized as revenue expenditure within the budget, however additionally they make a contribution to the introduction of constant assets inclusive of roads, bridges, colleges, hospitals, and so forth.
  • Therefore, to seize the genuine extent of public investment by using the primary authorities, an idea of ‘effective capital expenditure’ has been brought up.
  • Effective capital expenditure is described as the sum of capital expenditure and offers for advent of capital property.
  • It is budgeted at Rs 13.7 lakh crore or 4.5% of GDP (Union Budget 2023-24).

Source: The Hindu

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