Context: The Cabinet Committee on Economic Affairs chaired by Prime Minister, approved the proposal of Department for Promotion of Industry and Internal Trade (DPIIT) for Central Sector Scheme for Industrial Development of Jammu & Kashmir.
More on the news:
- The scheme is approved with a total outlay of Rs. 28,400 crore upto the year 2037.
- The scheme is being approved, amid the backdrop of the reorganization of Jammu & Kashmir into UT of Jammu & Kashmir under the J&K Reorganisation Act, 2019.
About the scheme:
- Objective: The main purpose of the scheme is to generate employment which directly leads to the socio economic development of the area.
- Vision: Industry and service led development of J&K needs to be given a fresh thrust with emphasis on job creation, skill development and sustainable development by attracting new investment and nurturing the existing ones.
- Incentives under the scheme:
- Capital investment incentive: In manufacturing or construction of buildings and other durable physical assets is available.
- Capital Interest subvention: At the annual rate of 6% for maximum 7 years on loan amount up to Rs. 500 crore .
- GST Linked Incentive: 300% of the eligible value of actual investment made for 10 years. Working Capital Interest Incentive: All existing units at the annual rate of 5% for maximum 5 years.
- Key features of the scheme:
- Scheme is made attractive for both smaller and larger units.
- The scheme aims to take industrial development to the block level in UT of J&K, which is the first time in any Industrial Incentive Scheme of the Government of India.
- Scheme has been simplified on the lines of ease of doing business by ensuring less compliance burden without compromising on transparency.
- Major impact:
- Radical transformation: Thereby enabling J&K to compete nationally with other leading industrially developed States or UTs of the country.
- Likely to attract unprecedented investment: That will provide direct and indirect employment to about 4.5 lakh persons.
Different types of schemes:
- In India’s development plan exercise there are two types of schemes - central sector and centrally sponsored scheme.
- The nomenclature is derived from the pattern of funding and the modality for implementation.
- Central sector schemes:
- It is 100% funded by the Union government and implemented by the Central Government machinery.
- In addition, the Central Ministries also implement some schemes directly in States or UTs which are called Central Sector Schemes but resources under these Schemes are not generally transferred to States.
- Central sector schemes are mainly formulated on subjects from the Union List.
- Centrally Sponsored Scheme (CSS): Under this, a certain percentage of the funding is borne by the States in the ratio of 50:50, 70:30, 75:25 or 90:10 and the implementation is by the State Governments.
- Centrally Sponsored Schemes are formulated in subjects from the State List to encourage States to prioritise in areas that require more attention.
- As per the Baijal Committee Report (1987), CSS have been defined as the schemes which are funded directly by Central Ministries or Departments and implemented by States or their agencies, unless they fall under the Centre's sphere of responsibility - the Union List.