Govt to give Rs 12,000 cr special interest-free 50-year loan to states

Finance Minister Nirmala Sitharaman on Monday said a special interestfree 50year loan will be issued to states by the Centre for Rs 12000 crore capital expenditureAddressing a press conference ahead of crucial 43rd Goods and Services Tax GST Council meeting Sithraman said Capital expenditure money spent on infrastructure and asset creation has a multiplier effect on the economy it not only improves current GDP but also future GDP we want to give a new thrust to capital expenditure of both states and CentreWe are issuing a special interestfree 50year loan to states for Rs 12000 crore capital expenditure It will be issued in three parts In Part 1 Rs 200 crore each for eight NorthEast states and Rs 450 crore each for Uttarakhand Himachal In Part 2 Rs 7500 crore for remaining states as per 15th finance commission devolution In Part 3 Rs 2000 crore for the state which meets at least 3 out of 4 reforms given in Aatma Nirbhar fiscal deficit package she addedBoth Part 1 and Part 2 of interestfree loans given to states are meant to be spent by March 31 2021 in which 50 per cent will be given initially remaining upon utilisation of first 50 per cent Finance Minister saidThe Finance Minister was addressing at a time when the countrys GDP had contracted 239 per cent during the AprilJune quarter This quarter took the hardest hit of coronavirusinduced lockdown across the country The Reserve Bank of India has predicted that the whole financial years GDP would shrink 95 per cent in the current fiscalThe Finance Minister also announced an additional budget of Rs 25000 crore in addition to Rs 413 lakh crore given in Budget 2020 will be provided for capital expenditure of the Centre on roads defence infrastructure water supply urban development and domestically produced capital equipmentWe estimate that the measures announced today for boosting consumer spending and capital expenditure will boost demand by Rs 73000 crore to be spent by March 31 2021 Given that private sector spending through LTC tax benefit would be at least Rs 28000 crore we estimate the total demand boost due to todays measures to be more than Rs 1 lakh crore she saidTodays solution should not cause tomorrows problem The central government has kept in mind that measures to stimulate demand must not burden the citizen with future inflation or put government debt on an unsustainable path If demand goes up based on the stimulus measures announced today it will have an impact on those people who have been affected by COVID19 and are desperately looking for demand to keep their business going she addedFinance Minister Nirmala Sitharaman will chair 43rd Goods and Services Tax GST Council meeting through video conferencing later in the dayKeep scrolling to read more newsCatch up on all the latest Crime National International and Hatke news here Also download the new midday Android and iOS apps to get latest updates MidDay is now on Telegram Click here to join our channel middayinfomedialtd and stay updated with the latest newsThis story has been sourced from a third party syndicated feed agencies Midday accepts no responsibility or liability for its dependability trustworthiness reliability and data of the text Midday managementmiddaycom reserves the sole right to alter delete or remove without notice the content in its absolute discretion for any reason whatsoever