Eleven states have achieved the capex target set by the finance ministry in the 1st Quarter of 2021-22 thereby getting permission to borrow an additional amount of Rs 15,721 crore as an incentive.
The 11 states include Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand.
The additional open market borrowing permission granted to states under the programme is equivalent to 0.25 per cent of their Gross State Domestic Product (GSDP). Additional financial resources thus made available will help the States in pushing their capital expenditure further, the finance ministry said in a statement.
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 of 4% of GSDP for the States for 2021-22, 0.50 per cent 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 Dept of Expenditure. To become eligible for incremental borrowing, States were required to achieve at least 15 per cent of the target set for 2021-22 by the end of 1st quarter of 2021-22, 45 per cent by the end of 2nd quarter, 70 per cent by the end of 3rd quarter and 100 per cent by March 31, 2022.
