A total of 11 states has successfully achieved to meet the requisite target set by the Ministry of Finance for the capital expenditure in the 1st quarter of 2021-22.
The states include, Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan, and Uttarakhand, a press release by the ministry said
As an incentive, these States have been granted permission by the Department of Expenditure to borrow an additional amount of Rs. 15,721 crore. The additional open market borrowing permission granted is equivalent to 0.25 percent of their Gross State Domestic Product (GSDP). Additional financial resources thus made available will help the States in pushing their capital expenditure further. State-wise amount of additional borrowing permitted is enclosed.
Accordingly, out of the net borrowing ceiling (NBC) of 4% of GSDP for the States for 2021-22, 0.50 percent 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 1st quarter of 2021-22, 45 percent by the end of 2nd quarter, 70 percent by the end of 3rd quarter and 100 percent by 31st March 2022.
The next review of the Capital expenditure of States will be undertaken by the Department of Expenditure in December 2021. In this round, the capital expenditure achieved by the States till 30th September 2021 will be assessed. The third review will be done in the month of March 2022 on the basis of capital expenditure incurred by the State 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 30th September 2021 or 70 percent of the target by 31st December 2021.