11 States meet the target for capital expenditure in Q1FY22; get permission to mobilise additional Rs 15,721 cr
As an incentive, these States have been granted permission by the Department of Expenditure to borrow an additional amount of Rs 15,721 cr. The additional open market borrowing permission granted is equivalent to 0.25 per cent of their Gross State Domestic Product (GSDP)
Eleven States namely, Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand have achieved the target set by the Ministry of Finance for the capital expenditure in the first quarter of 2021-22, a government release said.
As an incentive, these States have been granted permission by the Department of Expenditure to borrow an additional amount of Rs 15,721 cr. The additional open market borrowing permission granted is equivalent to 0.25 per cent of their Gross State Domestic Product (GSDP), the release further said.
See Zee Business Live TV Streaming Below:
Out of the net borrowing ceiling (NBC) of 4 per cent 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 Department of Expenditure.
To become eligible for incremental borrowing, states were required to achieve at least 15 percent of the target set for 2021-22 by the end of April-June quarter of FY 2021-22, 45 per cent by the end of 2 quarter (July-September), 70 percent by the end of 3 quarter (October-December) and 100 percent by 31 March 2022.
Additional financial resources thus made available will help the states in pushing their capital expenditure further.
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, the release said.
Next review of capital expenditure of states will be undertaken by the Department of Expenditure in December 2021.
In this round, capital expenditure achieved by the States till 30 September, 2021 will be assessed.
Third review will be done in the month of March 2022 on the basis of capital expenditure incurred by the states during the first three quarters of the year 2021-22.
The capital expenditure-linked borrowing ceiling of 0.50 percent of GSDP will be allowed to those States who will achieve actual capital expenditure of at least 45 percent of the target by 30 September 2021 or 70 percent of the target by 31 December 2021.
There would be a final review of actual capital expenditure by the states in the month of June 2022.
Any shortfall/deficiency in actual capital expenditure for the year 2021-22 by the State in comparison with the targeted capital expenditure for the year 2021-22, will be adjusted from the borrowing ceiling of the State for the year 2022-23, the release said.
Get Latest Business News, Stock Market Updates and Videos; Check your tax outgo through Income Tax Calculator and save money through our Personal Finance coverage. Check Business Breaking News Live on Zee Business Twitter and Facebook. Subscribe on YouTube.