Informist, Thursday, Sep 19, 2024

--Source: Sanctioned 500-bln-rupee capex loans to states so far FY25
--CONTEXT: Govt aims to give states 1.5 trln rupees as capex loan FY25
--Fin min source: Gave states 300 bln rupees so far FY25 as capex loan

By Priyasmita Dutta

NEW DELHI – The Centre has so far disbursed over 300 bln rupees to states in the current financial as part of the Scheme for Special Assistance to States for Capital Expenditure in the form of 50-year interest-free loans, a senior finance ministry official said today. The Union Budget for 2024-25 (Apr-Mar) has set aside 1.50 trln rupees to be disbursed to states for capital expenditure under the scheme.

The allocation is part of the government's total capital expenditure target of 11.11 trln rupees for 2024-25. The Centre has sanctioned loans of around 500 bln rupees to states so far for capital expenditure, the official told Informist.

Disbursement under the scheme in the current fiscal was slow as the Model Code of Conduct was in effect from Mar 16, and central and state governments could not announce new investments, and could only take forward projects already underway. The Lok Sabha election was held from Apr 19 to Jun 1, with the results announced on Jun 4.

"States are making an attempt at increasing their capex, but the pace is not as steady as last year," the official said.

Unlike previous years, the expenditure department under the finance ministry had lowered the untied portion of the loan to 550 bln rupees or 37% of the overall loan in 2024-25. Last year, the government had kept 1.00 trln rupees or 77% of the total loans of 1.30 trln rupees as untied.

Of the 300 bln rupees that the Centre has released so far, the majority of it is from the untied portion of the scheme and only a small portion from the tied part, the official said.

First launched in the Budget for 2021-22, the Scheme for Special Assistance to States for Capital Investment is in line with the government's thrust on capital expenditure to drive economic growth. The total amount disbursed under the scheme last year was 1.10 trln rupees, against the Budget estimate of 1.06 trln rupees. End

Edited by Aditya Sakorkar

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