The scheme is aimed at boosting capital expenditure by the state governments, who are facing a difficult financial environment this year due to the shortfall in tax revenue arising from the Covid-19 pandemic.

According to the Ministry of Finance, capital expenditure has a higher multiplier effect, enhancing the future productive capacity of the economy, and results in a higher rate of economy growth.

"Therefore, despite the adverse financial position of the central government, it was decided to extend a special assistance to the state governments in respect of capital expenditure, in financial year 2020-21,"

"The scheme has got very warm response from the state governments. So far capital expenditure proposals of Rs 9,879.61 crore of 27 States have been approved by the Ministry of Finance."

As per the statement, an amount of Rs 4,939.81 crore has already been released to the states as the first instalment under the scheme.

"The capital expenditure projects have been approved in diverse sectors of economy like, 'Health, Rural Development, Water Supply, Irrigation, Power, Transport, Education, Urban Development'."

Besides, the scheme has three parts of which the first covers the north-eastern region.

"Under this part, Rs 200 crores is allocated to seven north-eastern states. In view of higher population and geographical area, Assam has been allocated Rs 450 crores under the scheme,"

The second part of the scheme for all other states that are not included in part-I.

"An amount of Rs 7,500 crores is earmarked for this part.  This amount has been allocated amongst these states in proportion to their share of central tax as per the interim award of the 15th Finance Commission for the year 2020-21,"

In addition, the third part of the scheme is aimed at pushing various citizen-centric reforms in the states.

"Under this part, an amount of Rs 2,000 crores is earmarked. This amount will be available only to those states who carry out at least 3 out of the 4 reforms specified by the Ministry of Finance in its letter dated 17th May, 2020 regarding reform linked  additional borrowing permissions."

Accordingly, the four reforms are - 'One Nation One Ration Card, Ease of doing Business Reform, Urban Local Body per Utility Reform and Power Sector Reform'.