The Finance Ministry has approved capital projects of an additional amount of Rs 179 crore for Telangana. This is in addition to the capital projects of Rs 179 crore approved for the state earlier.
Additional projects have been approved in the state as an incentive for undertaking reforms in three out of the four stipulated citizen-centric areas, i.e. One Nation One Ration Card, Ease of Doing Business, and Urban Local Bodies Reforms. The projects have been approved under the newly-launched scheme of ‘Financial Assistance to States for capital projects’.
Telangana has become the second state to get additional funds under the scheme. Earlier, Madhya Pradesh was sanctioned additional capital projects of Rs 660 crore as an incentive for undertaking reforms in three out of four stipulated areas.
The citizen-centric areas identified by the government of India for undertaking reforms by the states are – One Nation One Ration Card reforms, Ease of Doing Business reforms, power sector reforms and Urban Local Bodies reforms.
Out of the additional approved amount of Rs 179 crore, an amount of Rs 89.50 crore has been released to the state as first instalment. All the capital projects identified by the state government of Telangana to be taken up from the additional funds are in the road sector.
The scheme of Special Assistance to States for capital expenditure was announced by the Finance Minister on October 12, 2020 as part of Aatmanirbhar Bharat package.
The scheme is aimed at boosting capital expenditure by the state governments who are facing difficult financial environment this year due to the shortfall in tax revenue arising from the COVID-19 pandemic. Capital expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economy growth.
Therefore, despite the adverse financial position of the central government, it was decided to extend special assistance to the state governments in respect of capital expenditure, in financial year 2020-21.