Lok Sabha Question No. 1894 (UNSTARRED), answered on 2022-03-14
Subject: Low Income States
Ministry: FINANCE
Asked by: Komati Reddy Venkat Reddy, Manne Srinivas Reddy

## MINISTRY OF FINANCE DEPARTMENT OF ECONOMIC AFFAIRS ECONOMIC DIVISION

## LOK SABHA UNSTARRED QUESTION NO. 1894

TO BE ANSWERED ON MARCH 14, 2022

## LOW INCOME STATES

1894. SHRI KOMATI REDDY VENKAT REDDY: SHRI MANNE SRINIVAS REDDY:

Will the Minister of FINANCE be pleased to state:

- (a) whether it is a fact that the low-income States are deprived on many fronts and they  have  low  accessibility  to  credit,  low  investments,  low  power  availability  and accessibility,  and  high  energy  costs  whereas  at  the  same  time  the  high-income States have a big share in industry and commerce because they are not deprived on the same fronts; and
- (b) if so, the details thereof and the reasons therefor along with the corrective steps being taken in this regard?

## ANSWER

## MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHURY)

- (a)  and  (b)  The  reasons  for  a  state  to  be  low-income  are  several  and  includes historical, geographical and socio-political reasons, among others. Ensuring equitable  growth  of  Indian  states  has  been  a  priority  for  several  governments  in independent India and more so for the present government. In order to achieve this, several  mechanisms  have  been  put  in  place,  which  are  aimed  at  transferring resources from the Centre to the states.

As  per  the  recommendations  of  the  Fifteenth  Finance  Commission,  the  share  of states in the central taxes for the 2021-26 period is 41%, with the larger share going to low income and more populous states. In addition, the Finance Commission has also recommended several other specific and non-specific grants.

The Union Budget also implements schemes and programmes which involve transfer of  resources  from  the  Centre  to  the  states,  which  suitably  augments  the  flow  of resources.  Most  recently,  under  the  Scheme  for  'Special  Assistance  to  States  for Capital  Expenditure',  about  Rs.  12,000  crore  was  earmarked  in  FY  2020-21.  This helped to sustain state level capital expenditure in the pandemic year. In view of the positive  response  to  the  scheme  and  considering  the  requests  of  the  State Governments, the Government decided to continue the scheme in the year 2021-22.

The outlay of the 'Scheme for Financial Assistance to States for Capital Investment', increased  from  Rs.  15,000  crore  in  R.E  of  2021-22  to  Rs.  1  lakh  crore  in  B.E  of 2022-23. This will  lead  to  more  equitable  growth  experience  for  Indian  states  and help in closing the income gap between them.

To  further  give  a  boost  to  infrastructure,  PM  Gati  Shakti,  an  initiative  aimed  at synergizing the infrastructure projects of all key infrastructure Ministries for planning and  coordinated  execution  of  nation-wide  infrastructure  projects  including  all  the State  Governments  was  launched.  PM  Gati  Shakti  can  prove  to  be  a  watershed intervention  enabling  further  investment  in  low-income  states.  Further,  several initiatives  such  as  National  Infrastructure  Pipeline  (NIP)  and  National  Monetization Plan  (NMP),  have  been  taken  to  propel  the  infrastructure  investment.  To  give  a special boost to infrastructure projects in North  Eastern States, North East Special Infrastructure  Development  Scheme  (NESIDS)  was  launched.  Under  NESIDS, financial assistance is provided for projects of physical infrastructure relating to water supply, power, connectivity to promote tourism; and for projects of social sector for creation of infrastructure for primary and secondary education and health. As on 3 rd February 2022, 110 projects worth Rs.2563.14 crore have been sanctioned in the North Eastern States under NESIDS, which are at various stages of implementation.

To  enhance  availability  of  capital  to  states,  Union  Cabinet  in  2017  approved  the policy  guidelines  to  allow  financially  sound  State  Government  entities  to  borrow directly from bilateral ODA (Official Development Assistance) partners for implementation of vital infrastructure projects. This is also helping to accelerate the pace  of  investment  in  major  infrastructure  projects  in  the  country,  bringing  more equitable growth to Indian states.

To  enhance  accessibility,  UDAN  scheme  was  launched  in  2016  to  enhance  air connectivity in tier II and III cities. As on 7 th Feb 2022, out of 948 valid routes, 403 routes involving 65 airports (including 8 heliports & 02 water aerodromes) have been operationalised  across  the  country.  This  has  increased  connectivity  among  the states contributing to their development.

To  enhance  power  availability,  Government  of  India  has  taken  various  initiatives including  DeenDayal  Upadhyaya  Gram  Jyoti  Yojana  (DDUGJY),  Integrated  Power Development Scheme (IPDS) and Ujjwal Discom Assurance Yojana (UDAY) to help states achieve the objective of providing uninterrupted power supply to all households. As per independent surveys, the availability of power in rural areas has gone up from an average of 12 hours in 2015-16 to 20.6 hours in the year 2020; and in the urban areas, the availability of power has gone up to 22 hours. In May, 2021, the average availability of power in the rural areas was 22.17 hours, and in urban areas it was 23.33 hours.

The  government's  vision  is  also  that  promoting  R&D,  innovation,  product  &  IPR creation  more  equitably  across  all  states  is  one  way  of  closing  the  income  gap between them. As on 27 th December 2021, Software Technology Parks of India has 62 centres of which 54 centres are in Tier-II/III cities. These centres are playing an important  role  in  promoting  software  exports,  R&D,  innovation,  and  tech-driven entrepreneurship  in  tier-II/III  cities,  enabling  the  closure  of  income  gap  between Indian states.

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