Centre to give ₹15k crore interest-free loans to states for capex

The Centre will present further 15,000 crore to states in 2021-22 as curiosity free mortgage for capital expenditure, together with 5,000 crore if states undertake asset monetisation and divestment of public sector enterprises.

An analogous scheme was introduced final October as a part of the Atmanirbhar Bharat scheme to assist increase capital expenditure of the state governments dealing with monetary constraints as a consequence of a shortfall in tax income collections because of the Covid-19 pandemic. As a part of the scheme, 12,000 crore was earmarked for the scheme for 2020-21, and 11,830 crore was launched to states.

“In view of the optimistic response to the scheme and, contemplating the requests of state governments, the federal government has determined to proceed with the scheme in 2021-22. The division of expenditure has issued recent tips on this regard on the ‘Scheme of Monetary Help to States for Capital Expenditure’ for the monetary 12 months 2021-22. The finance minister had in her funds speech introduced that the Centre would take measures to nudge states to spend extra on infrastructure and to incentivise disinvestment of their public sector enterprises,” the finance ministry stated in a press release on Friday.

Capital expenditure creates employment and has a excessive multiplier impact, enhancing future manufacturing capability within the financial system, which leads to a better price of financial progress.

As a part of the scheme, 2,600 crore might be supplied to North-East and hill states—whereas Assam, Himachal Pradesh and Uttarakhand will get 400 crore, every, the remaining states have been allotted 200 crore every.

Apart from, 7,400 crore has been allotted for different states in proportion to their share of central taxes, as per the requisition introduced by the fifteenth Finance Fee for 2021-22. The remaining 5,000 crore is allotted for offering incentives to states that monetise or recycle infrastructure property and provoke disinvestment of state PSEs. “States will obtain interest-free 50-year mortgage starting from 33% to 100% of the quantity realised by them, by means of asset sale, itemizing and disinvestment,” the finance ministry stated.

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