Bhubaneswar: The State of Odisha has missed the target set by the Ministry of Finance for the Capital Content of Expenditure (CAPEX) in the first Quarter of Financial Year 2021-22.
Though the State’s overall expenditure has gone up, stress is being given for more spending under CAPEX Programs as the level of spending in this sector requires improvement, sources said.
The expenditure of the State Government had also gone up by 24.29 per cent during the First Quarter.
The total expenditure till end of June, 2021 was Rs 25,194 crore whereas the total expenditure up to the same period of last fiscal was of Rs 20,269 crore.
However CAPEX spending was not encouraging for which there is a need for push, officials feel.
Notably, eleven States namely, Andhra Pradesh, Bihar, Chhattisgarh, Haryana, Kerala, Madhya Pradesh, Manipur, Meghalaya, Nagaland, Rajasthan and Uttarakhand have achieved the target, officials admit.
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.
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 per cent 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 first quarter of 2021-22, 45 percent by the end of 2nd quarter, 70 percent by the end of 3rd quarter and 100 percent by March 2022.
Next review of Capital Expenditure of States will be undertaken by the Department of Expenditure in December, 2021. In the second round, Capital Expenditure achieved by the States till 30 September, 2021 will be assessed, officials said.
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 30 September 2021 or 70 percent of the target by 31December 2021, they said.
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.