11 States meet Q1 capital expenditure target, allowed to mobilise additional Rs 15,721 crore
Ministry of Finance

11 States meet Q1 capital expenditure target, allowed to mobilise additional Rs 15,721 crore

New Delhi, September 15, 2021

Eleven states, which have achieved the target set by the Ministry of Finance for the capital expenditure in the 1st quarter of 2021-22, have, as an incentive, 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 % of their Gross State Domestic Product (GSDP), a press release from the Ministry of Finance said here on Tuesday.

Additional financial resources thus made available will help the States in pushing their capital expenditure further. The eleven states are Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand.

"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. Accordingly, out of the net borrowing ceiling (NBC) of 4% of GSDP for the States for 2021-22, 0.50 % of GSDP was earmarked for incremental capital expenditure to be incurred by the States during the Financial Year. The target for incremental capital expenditure for each state to qualify for this incremental borrowing was fixed by the Department of Expenditure," the release said.

To become eligible for incremental borrowing, the states were required to achieve at least 15% of the target set for 2021-22 by the end of the first quarter, 45% by the end of the 2nd quarter, 70% by the end of the 3rd quarter and 100% by March 31, 2022.

The next review of the capital expenditure of the states will be undertaken in December 2021. In this round, capital expenditure achieved by the States till September 30 will be assessed.

A third review will be done in March 2022 based on 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% of GSDP will be allowed to those states achieving actual capital expenditure of at least 45% of the target by September 30, 2021, or 70% of the target by December 31, 2021.

The final review of actual capital expenditure by the states will be held in June 2022. Any shortfall/deficiency in actual capital expenditure for the year 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 added.

NNN

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