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Fiscal Developments 71

due to non-release of compensation (owing to inadequate balance in GST compensation fund).
The aforesaid borrowing arrangement was extended for the current financial year 2021-22 to
raise their endeavour, Ministry of Finance has frontloaded the release of assistance under the
back-to-back loan facility during FY 2021-22 of ` 1.59 lakh crore.
3. Scheme for Special Assistance to States for Capital Expenditure

Considering the fiscal environment faced by the State Governments during 2020-21 due to the
shortfall in tax revenues arising from the COVID-19 pandemic, ‘Scheme for Special Assistance
to States for Capital Expenditure’, was approved wherein special assistance of ` 11,830 was
provided to the State Governments in the form of 50-year interest free loan during 2020-21. This
Scheme of Special Assistance to States for Capital Expenditure has been extended for the year
2021-22 with an allocation of ` 10,000 crore. The Scheme for the financial year 2021-22 has
three parts:

Part-I is for the 8 north eastern States i.e. Assam, Arunachal Pradesh, Meghalaya, Manipur,
Mizoram, Nagaland, Sikkim and Tripura, and for the hill States of Uttarakhand and Himachal
Pradesh. The sum allocated for this part is ` 2,600 crore. Out of this amount, ` 1,400 crore
is divided equally among 7 north eastern States while ` 1,200 crore is earmarked for Assam,
Uttarakhand and Himachal Pradesh in equal shares (`400 crore each).

Part-II is for all other States not included in Part-I. An amount of ` 7,400 crore is earmarked for
this part. This amount has been allocated amongst these States in proportion to their share of
Central Taxes as per the award of the 15th Finance Commission for the year 2021-22.

Part-III is for providing incentives to States Governments for privatization/disinvestment of
the State Public Sector Enterprises (SPSEs) and monetization/recycling of assets. Under this
part, States will be provided additional funds as 50 years interest free loan over and above their
allocation under Part-I/Part-II of the Scheme. An amount of ` 5,000 crore is allocated for this
part of the Scheme.

General Government Finances

2.48 The General Government finances give an overview of fiscal position of the Government
sector as a whole. Figure 21 shows the trends in General Government debt and deficits over the
past few years. The General Government liabilities as a proportion of GDP increased steeply
during 2020-21 on account of the additional borrowings made by Centre and States due to the
shortfall in revenue and higher expenditure requirements arising out of COVID-19 pandemic.
However, in 2021-22 BE, the fiscal indicators are expected to rebound with the recovery in the
economy and the General Government is expected to follow the path of fiscal consolidation.
Detailed discussion on the dynamics of debt sustainability may be seen in Chapter 2 of Volume
1 (Economic Survey 2020-21).