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Updated on: Friday, November 12, 2021, 10:10 PM IST

Seven states meet Q2 capex target; get approval for Rs 16,691 cr additional borrowing

In the pandemic year of FY21, the 'nominal Investment rate', dipped further to 27.1 per cent while capex in the listed corporate space was relatively better with cash spent on 'plant property and equipment' (PPE) falling by 6.6 per cent YoY / Representational Image | File photo

In the pandemic year of FY21, the 'nominal Investment rate', dipped further to 27.1 per cent while capex in the listed corporate space was relatively better with cash spent on 'plant property and equipment' (PPE) falling by 6.6 per cent YoY / Representational Image | File photo

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Seven states have achieved capital expenditure target for the September quarter and received approval for Rs 16,691 crore of additional borrowing, Finance Ministry said on Friday.

The states -- Chhattisgarh, Kerala, Madhya Pradesh, Meghalaya, Punjab, Rajasthan and Telangana -- have achieved the target set by the Ministry of Finance for the capital expenditure up to the second quarter of 2021-22, an official statement said.

As an incentive, these states have been granted permission by the Department of Expenditure to borrow an additional amount of Rs.16,691 crore.

The additional open market borrowing permission issued is equivalent to 0.5 per cent of Gross State Domestic Product (GSDP). Additional financial resources thus made available will help the states in pushing their capital expenditure further, the statement added.

Capital expenditure has a high multiplier effect, enhances the future productive capacity of the economy, and results in a higher rate of economic growth.

Accordingly, out of the net borrowing ceiling (NBC) of 4 per cent of GSDP for the states for 2021-22, borrowings up to 0.50 per cent of GSDP were earmarked for incremental capital expenditure to be incurred by the states during 2021-22.

The target for incremental capital expenditure for each state to qualify for this incremental borrowing was fixed by the Department of Expenditure.

To become eligible for incremental borrowing, states were required to achieve at least 15 per cent of the target set for 2021-22 by the end of June quarter of 2021-22, 45 per cent by the end of September quarter, 70 per cent by the end of December quarter and 100 per cent by March 31, 2022.

Earlier, after the first round of review undertaken in September 2021, additional borrowing permission of Rs 15,721 crore was issued to 11 states for meeting the target for capital expenditure set for the June quarter of 2021-22.

Thus, after two rounds of review of capital expenditure, total additional borrowing permission of Rs 32,412 crore has been issued to states, the statement said.

(With PTI inputs)

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Published on: Friday, November 12, 2021, 10:10 PM IST
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