Government has cleared projects worth Rs 2,900 crore in eight states under its scheme for providing special assistance to them for capital expenditure in the current financial year. To allow states to implement these projects, Finance Ministry has released funds worth Rs 1,393 crore to them, till date.

The eight states where projects have been approved are Punjab, Bihar, Madhya Pradesh, Chhattisgarh, Himachal Pradesh, Maharashtra, Telangana and Sikkim.

The special assistance to states for capital expenditure for 2021-22 was launched by the Centre in April 2021 in order to provide financial help to states, keeping in mind the rising financial burden on them to manage their capital expenditure due to the raging second wave of the Coronavirus pandemic.

The scheme provides financial help to states through a 50-year interest free loan up to an overall amount not crossing Rs 15,000 crore during the current financial year.

There are three components to the scheme. Under the first part, the eight north-eastern states are provided funds along with the two hill states of Uttarakhand and Himachal Pradesh.

In the second part, funds are provided to all those states which don’t fall in the first part and the amount is allotted to states as per the proportion of their share of central taxes decided by the Finance Commission for 2021-22.

The third part of the scheme is meant for incentivising states for privatising or initiating disinvestment of state public sector enterprises. Here the states are given additional funds over and above the money released to them in the first two parts, to achieve the objective of disinvestment.