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Finance Ministry grants Rs 1,004 crore additional financial assistance to Andhra, MP


The finance ministry has provided additional financial assistance worth Rs 1,004 crore to Andhra Pradesh and Madhya Pradesh for capital expenditure after they completed three of the four citizen-centric reforms.

The two states have completed the One Nation, One Ration Card Reforms, Ease of Doing Business Reforms, and Urban Local Bodies Reforms, a finance ministry statement said on Wednesday.

While Madhya Pradesh has become entitled to receive Rs 660 crore for capital projects, Andhra Pradesh will get an additional amount of Rs 344 crore, it said, adding they have become the first group of states to complete three out of the four citizen-centric reforms.

In October last year, the government had announced the scheme for special assistance to states for capital expenditure under which it would offer Rs 12,000 crore interest-free 50-year loans to the states, as part of the Atmanirbhar Bharat Package 2.0.

“The Scheme has got a very warm response from the State Governments. So far capital expenditure proposals of Rs.9880 crore of 27 States have been approved by the Ministry of Finance. An amount of Rs.4940 crore has already been released to the States as the first instalment under the Scheme,” the statement said.

The additional financial assistance for the capital expenditure was in addition to the Rs 14,694 crore extra borrowing permission issued to these states for completing the reforms.

Capital expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economic growth, the finance ministry said.

“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,” it said.

Projects under the scheme have been approved in diverse sectors of economy like, health, rural development, water supply, irrigation, power, transport, education and urban development.

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