The Department of Expenditure, Ministry of Finance, Government of India, has granted approval for capital investment proposals amounting to Rs. 56,415 crores in 16 states for the current financial year. These proposals come under the scheme titled ‘Special Assistance to States for Capital Investment 2023-24.’ The approved capital investment projects encompass various sectors such as health, education, irrigation, water supply, power, roads, bridges, and railways. The scheme also provides funds to support the State’s share of initiatives like the Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana. This move aims to accelerate the progress of projects in these crucial sectors.
Boosting Capital Spending through Special Assistance Scheme
To amplify capital expenditure and provide impetus to capital spending by states, the ‘Special Assistance to States for Capital Investment 2023-24’ scheme was introduced in the Union Budget 2023-24. The scheme offers special assistance to state governments in the form of a 50-year interest-free loan, amounting to a total sum of Rs. 1.3 lakh (one lack and thirty thousand) crore during the financial year 2023-24. The objective is to encourage states to increase their capital investments, which have a higher multiplier effect on economic growth and development.
| Sl. No. | State | Amount Approved (Rs. in crore) |
| 1 | Arunachal Pradesh | 1255 |
| 2 | Bihar | 9640 |
| 3 | Chhattisgarh | 3195 |
| 4 | Goa | 386 |
| 5 | Gujarat | 3478 |
| 6 | Haryana | 1093 |
| 7 | Himachal Pradesh | 826 |
| 8 | Karnataka | 3647 |
| 9 | Madhya Pradesh | 7850 |
| 10 | Mizoram | 399 |
| 11 | Odisha | 4528 |
| 12 | Rajasthan | 6026 |
| 13 | Sikkim | 388 |
| 14 | Tamil Nadu | 4079 |
| 15 | Telangana | 2102 |
| 16 | West Bengal | 7523 |
Allocation and Parts of the Scheme
The scheme comprises eight parts, with Part-I being the largest, allocated Rs. 1 lakh crore. The distribution of this amount among states is proportionate to their share of central taxes and duties based on the 15th Finance Commission’s award. The other parts of the scheme are linked to reforms or sector-specific projects aimed at driving progress in various areas of development.
Incentives for Scrapping State Government Vehicles and Ambulances
Under Part II of the scheme, an allocation of Rs. 3,000 crores has been dedicated to providing incentives to states for scrapping state government vehicles and ambulances. This includes waivers of liabilities on old vehicles, tax concessions for individuals scrapping old vehicles, and the establishment of automated vehicle testing facilities. These incentives aim to promote the phasing out of old vehicles and encourage the adoption of newer, more eco-friendly alternatives.
Urban Planning and Urban Finance Reforms
Parts III and IV of the scheme focus on incentivizing states for reforms in urban planning and urban finance. An allocation of Rs. 15,000 crore has been set aside for urban planning reforms, with an additional Rs. 5,000 crore dedicated to incentivizing states to enhance the creditworthiness and financial condition of their Urban Local Bodies. These reforms aim to enhance the efficiency and sustainability of urban development and governance.
Promoting National Integration and Make in India
The scheme also aims to promote national integration, reinforce the concept of “Make in India,” and encourage the concept of “One District, One Product (ODOP)” through the construction of Unity Malls in each state. Part VI of the scheme has set aside Rs. 5,000 crore to support this objective. The Unity Malls will serve as platforms to showcase and promote local products and crafts, fostering economic growth and inclusivity.
