SCHEME OF SPECIAL ASSISTANCE TO STATES FOR CAPITAL INVESTMENT

Context

• Uttar Pradesh (UP) has been the highest recipient of the special assistance (loan) under the Scheme for Special Assistance to States for capital expenditure/investment over the last four years.

Trends in Capital Expenditure

1. UP and Bihar are the leading states meeting the capital expenditure (capex) criteria and receiving the maximum allocation.
2. Uttarakhand, Haryana, Kerala, and Punjab received about 1-2% of the total released amount.
3. Andhra Pradesh, Kerala, Manipur, and Punjab did not receive any allocation in 2023-24, as they did not meet the eligibility criteria.

About scheme

1. Launched in FY 2020-21 post-Covid-19 pandemic.
2. Continued as 'Scheme for Special Assistance to States for Capital Investment 2023-24.

Parts

1. Eight parts, with Part-I having the largest allocation of Rs. 1 lakh crore based on states' share of central taxes and duties from the 15th Finance Commission.
2. Other parts are linked to reforms or sector-specific projects.

Objectives

1. Stimulate demand and create jobs with a higher multiplier effect on the economy.
2. Speed up projects in key sectors like Jal Jeevan Mission and Pradhan Mantri Gram Sadak Yojana by providing state share funds.
3. Encourage states to undertake reforms in urban planning and urban finance for improved quality of life and governance in cities.

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