With 80 Lok Sabha seats, Uttar Pradesh (UP) holds immense significance for the BJP in its quest for a third consecutive term in power at the Centre. Alongside the Ram Mandir, the party is prioritising a development agenda as a key campaign issue. Notably, out of the ₹1,67,518.6-crore special assistance (loan) allocated by the Centre under the Scheme for Special Assistance to States for capital expenditure/investment, UP has been the highest recipient, securing ₹22,857.9 crore (14 per cent of the total release) over the last four years.

Recent data from the Union government’s Ministry of Finance reveals that in FY2023-24, up to December 13, the State has already received ₹12,458.43 crore. This amount constitutes a significant portion, accounting for 21 per cent of the total assistance released, which stands at ₹60,307.19 crore. The substantial financial support underscores the government’s commitment to bolstering development initiatives in UP.

This infusion of funds aligns with the BJP’s strategy to emphasise development achievements and initiatives in the State, as the party aims to navigate the electoral landscape successfully. Thanks to substantial financial backing by the Union government, UP CM Yogi Adityanath has declared that the State has moved from a BIMARU State to the path of a developed State and that in the coming years, it will become the “growth engine” of the country. 

How assistance has been allocated  

The Scheme for Special Assistance to States for Capital Expenditure was launched in FY2020-21. The scheme has been expanded and continued as ‘Scheme for Special Assistance to States for Capital Investment 2023-24’ with allocation of ₹1.3-lakh crore.

This includes an amount of ₹1-lakh crore under Part-I of the Scheme, which has been allocated to States in proportion to their share of Central taxes as per the award of the 15th Finance Commission and incentive amounts of ₹30,000 crore for reform-centric and sector-specific areas — scrapping old vehicles, urban planning reforms, financing reforms in urban local bodies to make them creditworthy for municipal bonds, housing for police personnel above or as part of police stations, unity malls, children and adolescent’ library and digital infrastructure.

Bihar gets benefits

Interestingly, while UP and Bihar are the top two States which have fulfilled the above-mentioned criteria and received maximum allocation under the Scheme in the last four years, Uttarakhand, Haryana, Kerala and Punjab are among the States which have received about 1-2 per cent of the total released amount under the Scheme.

In fact, data shows that Andrha Pradesh, Kerala, Manipur and Punjab have not received any allocation in 2023-24 and as per the Ministry of Finance information provided to the Lok Sabha this month; these States have not met the eligibility criteria prescribed under the Scheme.  

The objective of the Special Assistance to States for Capital Expenditure/Investment is to enhance capital expenditure by the States. The guidelines of the Scheme for Special Assistance to States for Capital Investment 2023-24 specify targets for capital expenditure for each State in the financial year 2023-24 to qualify for the second instalment under Part-I (Untied) of the Scheme for that fiscal year.