₹ 15,000 CRORE OUTLAY FOR THE “SCHEME FOR FINANCIAL ASSISTANCE TO STATES FOR CAPITAL INVESTMENT” IN RE 2021-22

₹ 1 LAKH CRORE ALLOCATED TO ASSIST STATES IN CATALYSING OVERALL INVESTMENTS IN 2022-23

FISCAL DEFICIT OF 4% OF GSDP ALLOWED TO STATES

The outlay for the ‘Scheme for Financial Assistance to States for Capital Investment’ is being enhanced from ₹ 10,000 crore in BE 2021-22 to ₹ 15,000 crore in RE 2021-22, stated the Union Finance and Corporate Affairs Minister Smt. Nirmala Sitharaman while presenting the Union Budget 2022-23 here in Parliament today.

Smt. Sitharaman proposed to allocate ₹ 1 lakh crore to assist the States in catalyzing 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% of GSDP of which 0.5% 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.

Capital investment assistance to states expanded, with long term interest free support and a 4% GSDP fiscal deficit framework tied to reforms. Central support increases the Scheme for Financial Assistance to States for Capital Investment and establishes long tenor interest free financing to catalyse state productive investment, earmarked for PM Gati Shakti projects, supplemental rural road funding, digitisation including OFC completion, and reforms in building byelaws, town planning, transit oriented development and transferable development rights. States are permitted a fiscal deficit ceiling of 4% of GSDP for 2022-23, with 0.5% tied to power sector reform conditionality communicated in 2021-22, and these allocations are additional to normal state borrowings.