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Single Reform Attracts Less Assistance

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Bhubaneswar : State Government has received lesser amount of assistance than the neighboring States like Andhra Pradesh and Madhya Pradesh for implementing only one single citizen-centric reforms like ease of doing business (EDOB).  

The Department of Expenditure, Ministry of Finance has allocated Rs.388 crore to utilize in capital expenditure and released Rs.194 crore to State for implementing the EDOB.

The capital expenditure projects have been approved in diverse sectors of economy such as health, rural development, water supply, irrigation, power, transport, education and urban development.

If the State Government implements all the four citizen-centric reforms, the State will receive much more funds to be utilized in capital outlay as it is allocating more funds in Capital Outlay, officials said on Wednesday.

The four reforms are – one nation one ration card, ease of doing business reform, urban local body/ utility reform and power sector reform.

While more than Rs.35,000 crore has been allocated in Annual Budget of Odisha during 2020-21 in capital outlay keeping in view the massive infrastructure projects to come up in the State, with implementation of more citizen-centric reforms, State will be able to rope in central assistance especially meant to boost reforms under Atmanirbhar Bharat Package.

However, Madhya Pradesh and Andhra Pradesh have become the first group of states to complete three of the four citizen centric reforms stipulated by the Department of Expenditure of the Ministry of Finance, the officials said.

Both these states have completed the one nation, one ration card reforms, ease of doing business reforms, and urban local bodies reforms.

Consequent upon completion of reforms in the three sectors, the Department of Expenditure has decided to provide additional financial assistance amounting to Rs.1004 crore to these states under the newly launched ‘Special Assistance to States for Capital Expenditure’ scheme”.

Andhra Pradesh will get an additional Rs.344 crore while Madhya Pradesh has become entitled to receive Rs.660 crore for capital projects.

The scheme was announced by the Finance Minister on October 12 last year as part of Aatma Nirbhar Bharat package.

The additional financial assistance for the capital expenditure is in addition to the permission of Rs.14694 crore issued to these States for extra borrowings for completing the reforms.

The new scheme is aimed at boosting capital expenditure by the State Governments who are facing difficult financial environment this year due to the shortfall in tax revenue arising from the COVID 19 pandemic.

The capital expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economy growth. 

Therefore, despite the adverse financial position of the Central Government, it was decided to extend a special assistance to the State Governments in respect of capital expenditure, in financial year 2020- 21.

The scheme has got very warm response from the State Governments. So far capital expenditure proposals of Rs.9880 crore of 27 States have been approved by the Ministry of Finance.  An amount of Rs.4940 crore has already been released to the States as the first installment under the scheme. 

Tamil Nadu has not availed the benefit of the Scheme.

An amount of Rs.7,500 crore is earmarked for this part.  This amount has been allocated amongst these States in proportion to their share of central tax as per the interim award of the 15th Finance Commission for the year 2020-21.

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