Madhya Pradesh (MP) & Andhra Pradesh (AP) became the 1st Group of States to complete three out of the Four citizen schemes stipulated by Department of Expenditure, Ministry of Finance. These two states have completed the implementation of schemes – One Nation One Ration Card Reforms, Ease of Doing Business Reforms, & Urban Local Bodies Reforms.

i.As they have completed the reforms, the Department of Expenditure, Ministry of Finance will provide them an additional Financial Assistance of INR 1004 Crore under the newly launched “Special Assistance to States for Capital Expenditure” scheme.

ii.The 4 reforms are One Nation One Ration Card, Ease of doing Business Reform, Urban Local Body/Utility Reform & Power Sector Reform.

Special Assistance to States for Capital Expenditure:

i.AP will get additional financial assistance of INR 344 Crore & MP will get INR 660 crore to implement capital projects.

ii.The Additional Financial Assistance for Capital Expenditure is in addition to the permission of INR 14694 crores issued to AP & MP for extra borrowings for completing the reforms.

iii.The amount can be used for implementation of projects in areas of Health, Rural Development, Water Supply, Irrigation, Power, Transport, Education, Urban Development.

iv.The scheme was announced by the Union Finance Minister Nirmala Sitharaman in October, 2020 as part of Aatma Nirbhar Bharat Package.

v.The main objective of the scheme is to boost Capital Expenditure by the State Governments who are facing a shortfall in Tax Revenue due to COVID-19 during the Financial Year 2020-21.

Funds to State Governments:

i.As part of the Scheme, Capital Expenditure proposals worth INR 9880 crore of 27 states have been approved by the Ministry of Finance.

ii.An Amount of INR 4940 crore has been released to states under the 1st Installment of the scheme.

Scheme has 3 parts:

Part-I:

i.It covers North-Eastern & Hill States. An amount of INR 200 Crores has been allocated to each of 7 North-Eastern states (Arunachal Pradesh, Meghalaya, Manipur, Mizoram, Nagaland, Sikkim & Tripura) & INR 450 Crore to 2 Hilly States(Himachal Pradesh & Uttarakhand).

ii.Assam with a high population and geographical areas has been allocated INR 450 crore.

Part-II:

i.For states which have not been included in Part-I of the Scheme and an amount of INR 7, 500 crore has been earmarked for this part.

ii.The amount has been allocated among the states based on their share of central tax as per the interim award of 15th Finance Commission for the year 2020-21.

Part-III:

i.Under this part an amount of INR 2000 Crores has been set aside for implementing citizen-centric reforms in the states.

ii.It will be available only to states who have completed 3 out of 4 reforms specified by the Ministry of Finance before December 31, 2020.