Finance Minister emphasises centre’s support to states for growth

States are encouraged to utilise the 50-year interest-free loan scheme for specified reforms

June 24, 2024

Most states support the 'Scheme for Special Assistance to States for Capital Investment' but suggest improvements

Rajasthan requests increased funding for the Eastern Rajasthan Canal Project, Jal Jeevan Mission, highways, and railways

Karnataka seeks the release of INR 5,300 crore for the Upper Bhadra Water Project and its designation as a national project

Karnataka also requests the inclusion of cesses and surcharges in the divisible pool and increased central contributions to housing schemes

Finance Minister Nirmala Sitharaman reiterated the Centre’s commitment to supporting states through timely tax devolution and GST compensation arrears to stimulate economic growth. In a pre-budget meeting with state finance ministers, she urged states to take advantage of the 50-year interest-free loan scheme offered by the Centre for undertaking specified reforms.

Sitharaman highlighted that the Union government supports states through various means, including Finance Commission grants and arrears of GST Compensation, to stimulate growth. She mentioned the ‘Scheme for Special Assistance to States for Capital Investment,’ noting that while most loans are untied, some are conditional on states implementing citizen-centric reforms and sector-specific capital projects. She encouraged states to fulfil the necessary criteria to avail of these loans.

Many states appreciated the Centre’s ‘Scheme for Special Assistance to States for Capital Investment’ and offered suggestions for its improvement. They also provided valuable recommendations for the Union Budget for FY 2024-25 and made some state-specific requests.

Rajasthan’s Finance Minister and Deputy Chief Minister, Diya Kumari, requested increased allocations for the Eastern Rajasthan Canal Project, Jal Jeevan Mission, national highways, and railway lines. Karnataka’s Finance Minister, Krishna Byre Gowda, sought the release of INR 5,300 crore for the Upper Bhadra Water Project and its designation as a national project. He also requested that cesses and surcharges be included in the divisible pool so that states receive their rightful share of central taxes. Additionally, he proposed increasing the central share for housing scheme beneficiaries from INR 1.5 lakh to INR 5 lakh in urban areas and from INR 1.2 lakh to INR 3 lakh in rural areas.

Source: Economic Times

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