Rs15,000-cr `Scheme for Financial Assistance to States for Capital Investment' in RE 2021-22

Nirmala Sitharaman while presenting the Union Budget 2022-23 has stated that the outlay for the ‘Scheme for Financial Assistance to States for Capital Investment’ is being enhanced from Rs10,000 crore in BE 2021-22 to Rs15,000 crore in RE 2021-22.

Sitharaman proposed to allocate Rs1 lakh crore to assist the states in catalysing overall investments in the economy for 2022-23. These fifty-year interest-free loans are over and above the normal borrowings allowed to the states, she said. This allocation will be used for PM Gati Shakti related and other productive capital investment of the states, including components for:
Supplemental funding for priority segments of PM Gram Sadak Yojana, including support for the States’ share;
Digitization of the economy, including digital payments and completion of OFC network; and
Reforms related to building byelaws, town planning schemes, transit-oriented development, and transferable development rights.
The finance minister announced that in 2022-23, in accordance with the recommendations of the 15th Finance Commission, the states will be allowed a fiscal deficit of 4 per cent of GSDP of which 0.5 per ent will be tied to power sector reforms, for which the conditions have already been communicated in 2021-22.
She said that the central government is committed to bolstering the hands of the states in enhancing their capital investment towards creating productive assets and generating remunerative employment.