New Delhi: As many as 11 states- Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand- have achieved the target set by the finance ministry for the capital expenditure in the first quarter of 2021-22.
As an incentive, these States have been granted permission by the Department of Expenditure to borrow an additional amount of Rs 15,721 crore.
Andhra Pradesh will be eligible to borrow Rs 2,655 crore, Madhya Pradesh Rs 2,590 crore, Rajasthan Rs 2,593 crore, Kerala Rs 2,255 crore, Haryana Rs 2,015 crore, Bihar Rs 1,699 crore, Chattisgarh Rs 895 crore, Uttarakhand, Rs 654 crore, Manipur Rs 90 crore, Meghalaya Rs 96 crore, and Nagaland Rs 89 crore.
The additional open market borrowing permission granted is equivalent to 0.25 percent of their Gross State Domestic Product (GSDP). Additional financial resources thus made available will help the States in pushing their capital expenditure further.
The capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth. Accordingly, out of the net borrowing ceiling (NBC) of 4% of GSDP for the States for 2021-22, 0.50 percent of GSDP was earmarked for incremental capital expenditure to be incurred by the States during 2021-22. The target for incremental capital expenditure for each state to qualify for this incremental borrowing was fixed by the Department of Expenditure.
To become eligible for incremental borrowing, States were required to achieve at least 15 percent of the target set for 2021-22 by the end of 1st quarter of 2021-22, 45 percent by the end of 2nd quarter, 70 percent by the end of 3rd quarter and 100 percent by 31st March 2022.
The next review of Capital expenditure of States will be undertaken by the Department of Expenditure in December, 2021. In this round, capital expenditure achieved by the States till 30th September, 2021 will be assessed. The third review will be done in the month of March, 2022 on the basis of capital expenditure incurred by the State during the first three quarters of the year 2021-22.
The capital expenditure-linked borrowing ceiling of 0.50 percent of GSDP will be allowed to those States who will achieve actual capital expenditure of at least 45 percent of the target by 30th September 2021 or 70 percent of the target by 31st December 2021.
There would be a final review of actual capital expenditure by the States in the month of June, 2022. Any shortfall/deficiency in actual capital expenditure for the year 2021-22 by the State in comparison with the targeted capital expenditure for the year 2021-22, will be adjusted from the borrowing ceiling of the State for the year 2022-23.
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