Special Assistance to States for Capital Investment 2023-24

Special Assistance to States for Capital Investment 2023-24

News: The Department of Expenditure under the Finance Ministry of India has approved capital investment proposals of Rs. 56,415 crore for 16 states in the current financial year 2023-24. These approvals have been given under the ‘Special Assistance to States for Capital Investment 2023-24’ Scheme.

What is the Special Assistance to States for Capital Investment 2023-24 scheme?
• “Special Assistance to States for Capital Investment 2023-24” was announced in the Union Budget 2023-24.
• It aims to provide a boost to capital spending by State Governments.
• Under the scheme, special assistance is being provided to the State Governments in the form of a 50-year interest-free loan up to an overall sum of Rs. 1.3 lakh crore during the financial year 2023-24.

Key objectives of the Scheme:
• The scheme is expected to have a higher multiplier effect on the economy by stimulating demand and creating jobs.
• It aims to enhance the pace of projects in key sectors such as Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana by providing funds for meeting the state share.
• The scheme also seeks to encourage states to undertake reforms in urban planning and urban finance to improve the quality of life and governance in cities.

What are the different parts of the scheme?
• The scheme has eight parts, Part-I being the largest with allocation of Rs. 1 lakh crore. This amount has been allocated amongst states in proportion to their share of central taxes and duties as per the award of the 15th Finance Commission.
• Part II - It aims at providing incentives to States for the scrapping of State Government vehicles and ambulances, waiver of liabilities on old vehicles, providing tax concessions to individuals for scrapping of old vehicles, and setting up of automated vehicle testing facilities.
• Part–III & IV - It aims at providing incentives to States for reforms in Urban Planning and Urban Finance.
• Part V - It aims at increasing the housing stock for the police personnel and their families within the police stations in urban areas.
• Part VI - It aims to promote national integration, carry forward the concept of “Make in India” and promote the concept of “One District, One Product (ODOP)” through the construction of Unity Mall in each State
• Part VII - It aims to provide financial assistance to States for setting up libraries with digital infrastructure at Panchayat and Ward level for children and adolescents.
• Part VIII - Incentives for implementing timely release of Centrally Sponsored Scheme funds by State Governments to vendors and beneficiaries.