Key Points
For states, it was a tool to get much-needed funds at a time when they were battling post-Covid resource crunch..
While this part of the scheme has been continued with Rs 1.3 lakh crore allocated for the next fiscal, the instrument is now proposed to be used for R&D by the private sector as well as to create tourism assets.. Finance secretary TV Somanathan said the Rs 1 lakh crore for boosting R&D will be routed through a financial institution which will then provide funding to the private sector...
Asked about the Rs 75,000 crore meant to be provided to states for reforms-linked spending, Somanathan said that the milestones will be announced in the coming weeks..
The Centre has used the instrument to get the states to reform sectors such as power distribution which has been a source of losses for several state-run power companies which had to bear the burden of subsidised or free electricity...
"This is like free money to states to goad them to undertake desired reforms instead of letting them use money for wasteful purposes," explained a former finance ministry officer..
