‘Scheme for Special Assistance to States for Capital Investment 2023-24’ is an expansion and continuation of ‘Scheme for Special Assistance to States for Capital Expenditure,’ with allocation of ₹1.3-lakh crore.
About Special Assistance to States for Capital Investment 2023-24:
- To increase capital spending by states, the ‘Special Assistance to States for Capital Investment 2023-24‘ scheme was introduced in the Union Budget 2023-24.
- This scheme offers special assistance to state governments in the form of a 50-year interest-free loan, totaling up to Rs. 1.3 lakh crore for the financial year 2023-24.
- The aim is to enhance capital expenditure, considering its higher multiplier effect.
- Ministry: The Department of Expenditure under the Finance Ministry.
Basis for allocation of funds:
- The scheme comprises eight parts, with Part-I having the highest allocation of Rs. 1 lakh crore.
- This amount has been allocated amongst States in proportion to their share of central taxes & duties as per the award of the 15th Finance Commission.
- The remaining parts of the scheme are either linked to reforms or are for sector specific projects.
Part-II:
- Part-II of the scheme allocates Rs. 3,000 crore to provide incentives to states.
- This includes encouraging states to scrap state government vehicles and ambulances, waiving liabilities on old vehicles, giving tax concessions to individuals for scrapping old vehicles, and establishing automated vehicle testing facilities.
Parts III and IV:
- Parts III and IV of the scheme focus on providing incentives to states for reforms in Urban Planning and Urban Finance.
- Rs. 15,000 crore is set aside for Urban Planning Reforms, and an additional Rs. 5,000 crore is allocated to incentivize states in making Urban Local Bodies creditworthy and enhancing their finances.
Part-V and Part-VI:
- The scheme has additional objectives, including increasing housing for police personnel and their families within urban police stations, with Rs. 2,000 crore allocated for this in Part-V.
- It also aims to promote national integration, advance the “Make in India” concept, and support “One District, One Product (ODOP)” through the construction of Unity Mall in each state, with Rs. 5,000 crore earmarked for this purpose in Part-VI.
Part-VII
- Part-VII of the Scheme, with an allocation of Rs. 5,000 crore is for providing financial assistance to States for setting up libraries with digital infrastructure at Panchayat and Ward level for children and adolescents.
States which has received maximum amount of fund:
- Over the past four years, Uttar Pradesh and Bihar, being the top two states meeting the specified criteria, have received the highest allocation under the Scheme.
- In contrast, Uttarakhand, Haryana, Kerala, and Punjab have received about 1-2% of the total released amount under the Scheme during this period.
- As per recent data from the Ministry of Finance provided to the Lok Sabha, Andhra Pradesh, Kerala, Manipur, and Punjab did not receive any allocation in the fiscal year 2023-24.
- This is because these states did not meet the eligibility criteria specified under the Scheme.
Ref: Source
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