FinMin extends additional funds to MP, AP; both states first to complete 3 out of 4 reforms for common man

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January 6, 2021 2:55 PM

Madhya Pradesh and Andhra Pradesh have completed the One Nation, One Ration Card reforms, Ease of Doing Business reforms, and Urban Local Bodies reforms.

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The Ministry of Finance today announced additional financial assistance of Rs 1,004 crore for Madhya Pradesh and Andhra Pradesh. Both states received additional funds after completing three out of the four citizen-centric reforms stipulated by the government. The two states have completed the One Nation, One Ration Card reforms, Ease of Doing Business reforms, and Urban Local Bodies reforms. While Andhra Pradesh will get an additional amount of Rs 344 crore, Madhya Pradesh will get Rs 660 crore for capital projects. 

It is to be noted that under Prime Minister Narendra Modi’s flagship Atmanirbhar Bharat package, the scheme for ‘Special Assistance to States for Capital Expenditure’ was announced. This is in addition to the permission of Rs 14,694 crore issued to the states for extra borrowings for completing the reforms.

The scheme is aimed at boosting capital expenditure by the state governments, who are facing a difficult financial environment this year due to the shortfall in tax revenue amid the pandemic.  Since capital expenditure has a higher multiplier effect and it enhances the future productive capacity of the economy, the government had decided to extend the scheme despite the adverse financial position of the Centre.

Also Read: Services sector hit by rising costs, Covid-19; job cuts resume, December PMI falls

So far capital expenditure proposals of Rs 9,880 crore of 27 States have been approved by the finance ministry and an amount of Rs 4,940 crore has already been released to the states as the first installment under the Scheme. The capital expenditure projects have been approved in diverse sectors of the economy such as health, rural Development, water Supply, irrigation, power, transport, education, and urban development. 

Meanwhile, Andhra Pradesh, Goa, Haryana, Karnataka, Kerala, Telangana, Tripura, and Uttar Pradesh are the states that had successfully rolled out the PDS reform. On completion of reforms, additional borrowing permission of Rs 23,523 crore were issued to these states.

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