Seven states -- Chhattisgarh, Kerala, Madhya Pradesh, Meghalaya, Punjab, Rajasthan and Telangana -- have met the Ministry of Finance's target for the capital expenditure up to July-September quarter of 2021- 22.
As an incentive, these states have been granted permission by the Department of Expenditure on Friday to borrow an additional amount of Rs.16,691 crore, noted the Ministry of Finance in an official statement.
This additional open market borrowing permission issued is equivalent to 0.5 per cent of Gross State Domestic Product (GSDP).
State-wise amount of additional borrowing permitted is:
| Chhattisgarh | 895 |
| Kerala | 2,256 |
| Madhya Pradesh | 2,590 |
| Meghalaya | 96 |
| Punjab | 2,869 |
| Rajasthan | 2,593 |
| Telangana | 5,392 |
Additional financial resources, thus, made available will help the states in pushing their capital expenditure further, according to the ministry.
The ministry has explained that capital expenditure has a high multiplier effect, it 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 upto 0.50 per cent of GSDP were earmarked for incremental capital expenditure to be incurred by the States during 2021-22," read the statement.
The Department of Expenditure had fixed the target for incremental capital expenditure for each state to qualify for this incremental borrowing.
The ministry said for this round of review, the capital expenditure achieved by the states till September 30, 2021, has been assessed in respect of 22 states. Eligibility of remaining 6 states will be assessed on availability of data from the Comptroller and Auditor General of India (CAG).
The next round of review of capital expenditure by states will be undertaken in March 2020 on the basis of capital expenditure incurred by the state during the first three quarters of the year 2021-22.
Also Read: Retail inflation rises to 4.48% in October on increase in vegies prices
Also Read: Industrial production grows 3.1% in September as low base effect wanes