11 states meet their Capex targets in the First Quarter, to raise Rs 15,721 crore.

In the first quarter of the current fiscal year 2021-22, a total of 11 states met the central government’s capital expenditure objective.

According to a statement made by the Ministry of Finance on Tuesday, the states include Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan, and Uttarakhand.

The Department of Expenditure has granted these states permission to borrow an additional Rs 15,721 crore as an incentive.

The additional open market borrowing authority provided is equal to 0.25 percent of their GSP (GSDP). According to the Finance Ministry, the additional financial resources made available will assist states in increasing their capital expenditure.

Capital investment has a large multiplier impact, increasing the economy’s future productive capacity and resulting in a faster pace of economic growth.

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As a result, 0.5 per cent of the net borrowing ceiling (NBC) of 4% of GSDP for states in 2021-22 has been set aside for extra capital expenditure to be undertaken in 2021-22.

The Department of Spending set the additional capital expenditure objective for each state to qualify for this incremental borrowing.

 

States had to reach at least 15% of the objective established for 2021-22 by the end of the first quarter, 45% by the end of the second quarter, 70% by the end of the third quarter, and 100% by March 31, 2022, to be eligible for further borrowing.

The Department of Expenditure will conduct the next evaluation of state capital expenditures in December. The capital expenditures that states have made up to September 30, 2021 will be evaluated in this round.

In March 2022, a third assessment will be conducted based on capital expenditures incurred during the first three quarters of 2021-22.

States that accomplish real capital expenditure of at least 45 percent of the target by September 30, 2021, or 70 percent of the target by December 31, 2021, will be eligible for the capital expenditure-linked borrowing ceiling of 0.5 percent of GSDP.

In June 2022, states will conduct a final review of their actual capital expenditures. Any difference between a state’s actual capital spending for 2021-22 and its projected capital expenditure for 2021-22 will be deducted from the borrowing ceiling for 2022-23.