The untied funds in FY24 would be released to states in three equal instalments.
The Centre’s disbursement of interest-free 50-year capital expenditure loans to states have got a good start with the release of over Rs 30,000 crore or 50% of around Rs 60,000 crore sanctioned so far in the current financial year as against no disbursement in the year-ago period.
“Capex loans to states are progressing well. We are trying to release as much funds as possible to ensure that states accelerate capital expenditure,” a senior government official told FE.
Sixteen states including Karnataka, Madhya Pradesh, Mizoram, Odisha, Rajasthan, Sikkim, Tamil Nadu, Telangana, West Bengal, Bihar, Chhattisgarh, Goa, Gujarat, Haryana, Himachal Pradesh and Arunachal Pradesh have received early sanction by fulfilling basic conditionalities and submitting projects in time.
The outlay for the current year is Rs 1.3 trillion, with an untied component of Rs 1 trillion. An early release would ensure the resultant investments by them are evenly spread out during the year to produce a large growth multiplier.
Last year, when this special capex outlay was scaled up by more than six times to Rs 1 trillion, the release of funds started as late as October, owing to the fiduciary conditions and time taken by states to comply with them. By October last year, the release of funds were at Rs 26,300 crore and FY23 ended with Rs 81,200 crore.
This problem is not there in the current financial year because all states are now on board, and are in compliance with the fiduciary conditions. However, there are some concerns about whether all states would be able to fulfil the relevant condition for getting one-third of untied funds in the current fiscal.
The untied funds in FY24 would be released to states in three equal instalments. The first instalment of 33.3% (Rs 33,300 crore) would be released to each state government on meeting three basic conditions: adhering to branding norms for central schemes, sharing of scheme-wise spending data, and proof of deposit of the Centre’s share of the interest earned in Single Nodal Agency (SNA) account for each scheme.
The second instalment of untied funds would be released on utilisation of at least 75% of the first. The third instalment under this part would be disbursed on utilisation of 75% of the amount released in the first two and on meeting 45% of the total target fixed for capex by each state in FY24 in April-September.
The rules also mandate that the third instalment amount would be recovered from those states in FY25 that fail to meet the annual investment target by March 2024.
Source:financialexpress.com