GS2 GOVERNANCE:
- Overview
The Government of India has allocated funds under the Special Assistance Scheme, offering 50-year interest-free loans to states. The scheme promotes capital investment and supports state-led reforms.
- Scheme Details
- Launched: FY 2021 with an initial allocation of ₹12,000 crore.
- Current Allocation: ₹1.3 trillion (FY24), with ₹30,000 crore tied to specific reforms.
- Purpose: Supports post-pandemic recovery and infrastructure development.
- Fund Allocation & Distribution
- FY25 Allocation: ₹1.25 trillion.
- 97% of funds approved for disbursal.
- ₹55,000 crore (one-third) based on states’ share in central taxes.
- ₹95,000 crore contingent on states meeting reform targets.
- Reform Requirements
- States must comply with Centrally Sponsored Schemes and ensure fund transparency.
- Key reforms include:
- Tourism development (iconic destinations).
- Vehicle scrappage incentives.
- Industrial growth initiatives.
- Top Beneficiary States
- Uttar Pradesh: ₹13,042 crore.
- Bihar: ₹12,907 crore.
- Madhya Pradesh: ₹10,635 crore.
- Economic Impact
- GDP Growth Trends:
- Sept Quarter: Growth slowed to 5.4% (lowest in 2 years).
- Dec Quarter: Growth rebounded to 6.2%.
- Objective: Speedy loan approvals aim to boost state spending and economic growth.
- Future Outlook
- The scheme will strengthen state capacities and enhance infrastructure.
- Outcome-based funding will encourage states to achieve reform goals.