Seven states meet Q2 Capex target; get nod for Rs 16,691 cr add’l borrowing

By: |
November 12, 2021 6:07 PM

Capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth.

Additional financial resources thus made available will help the states in pushing their capital expenditure further, the statement added.Additional financial resources thus made available will help the states in pushing their capital expenditure further, the statement added.

Seven states have achieved capital expenditure target for the September quarter and received approval for Rs 16,691 crore of additional borrowing, Finance Ministry said on Friday.

The states — Chhattisgarh, Kerala, Madhya Pradesh, Meghalaya, Punjab, Rajasthan and Telangana — have achieved the target set by the Ministry of Finance for the capital expenditure up to the second quarter of 2021-22, an official statement said.

As an incentive, these states have been granted permission by the Department of Expenditure to borrow an additional amount of Rs.16,691 crore.

The additional open market borrowing permission issued is equivalent to 0.5 per cent of Gross State Domestic Product (GSDP).

Additional financial resources thus made available will help the states in pushing their capital expenditure further, the statement added.

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 (NBC) of 4 per cent of GSDP for the states for 2021-22, borrowings up to 0.50 per cent of GSDP were 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 Department 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 June quarter of 2021-22, 45 per cent by the end of September quarter, 70 per cent by the end of December quarter and 100 per cent by March 31, 2022.

Earlier, after the first round of review undertaken in September 2021, additional borrowing permission of Rs 15,721 crore was issued to 11 states for meeting the target for capital expenditure set for the June quarter of 2021-22.

Thus, after two rounds of review of capital expenditure, total additional borrowing permission of Rs 32,412 crore has been issued to states, the statement said.

Do you know What is India expected to grow 10 pc during current fiscal: NCAER Director General Poonam Gupt,FinMin releases Rs 9,871 cr grant to 17 state, Cash Reserve Ratio (CRR), Finance Bill, Fiscal Policy in India? FE Knowledge Desk explains each of these and more in detail at Financial Express Explained. Also get Live BSE/NSE Stock Prices, latest NAV of Mutual Funds, Best equity funds, Top Gainers, Top Losers on Financial Express. Don’t forget to try our free Income Tax Calculator tool.

Financial Express is now on Telegram. Click here to join our channel and stay updated with the latest Biz news and updates.

Next Stories
1Piyush Goyal asks gem, jewellery sector to focus on design, diversifying export product basket
2WTO delays key meeting amid Covid variant concerns: Official
3Draft agreement on fisheries subsidies submitted to ministers ahead of their meeting: WTO