New Delhi: 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 today.

The States-Chhattisgarh, Kerala, Madhya Pradesh, Meghalaya, Punjab, Rajasthan, and Telangana-have achieved the target set by the Ministry of Finance for 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 percent 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 percent of GSDP for the States for 2021-22, borrowings up to 0.50 percent 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 percent of the target set for 2021-22 by the end of June quarter of 2021-22, 45 percent by the end of September quarter, 70 percent by the end of December quarter and 100 percent by March 31, 2022

Source- PTI