Of the Rs 1.3 trillion capex support provided for states in the interim budget for FY25, Rs 55,000 crore in untied capex loans, rolled out from April 1.
The Centre has sanctioned Rs 15,000 crore and released Rs 10,000 crore as untied interest-free capex loans to the state governments so far in the current financial year, largely in line with the pace achieved last year, despite the general elections.
Of the Rs 1.3 trillion capex support provided for states in the interim budget for FY25, Rs 55,000 crore in untied capex loans, rolled out from April 1.
The reform/project linked Rs 75,000 crore loans would be rolled out after the new government presents the Budget next month.
“The untied capex loans sanction and disbursement will pick up in the coming weeks while the tied loans would likely begin after the budget,” an official said.
Given the demand from state finance ministers/ministers in their pre-budget meeting with Union Finance Minister Nirmala Sitharaman to increase the untied component of the capex loans, the Centre may top up the 50-year interest-free capex loans to states by Rs 20,000 crore to Rs 1.5 trillion in 2024-25 from Rs 1.3 trillion provided in the interim budget.
If the states’ demand is accepted, the untied component of the capex loans could be raised to Rs 75,000 crore from Rs 55,000 crore.
Seeking higher untied loans, states including Odisha, Chhattisgarh and West Bengal have said that higher untied funds would expedite better utilization of funds and timely achievement of project milestones.
To strengthen the hands of the states, the scheme for providing financial assistance to the states for capital expenditure introduced in Covid-hit FY21 has been scaled up and extended thereafter to boost economic activity across the country.
Of the Rs 1.3-trillion grant-like special capex facility for states in FY24, the Centre has approved Rs 25,727 crore and disbursed around Rs 4,000 crore till June 12, 2023. The sanction and disbursement then accelerated to Rs 60,000 crore and 30,000 crore, respectively, by July 8, 2023.
For the reform-linked component of the assistance, the Centre may work with state governments to encourage them to create a modern set of legislation, by-laws and urban planning processes using technology. It could support long-term infrastructure projects with centre-state-city partnerships with a vision to revitalise urban landscapes. The states are also likely to be incentivised to reduce compliances for small traders and MSMEs to enhance their ease of living and ease of doing business.
Source:financialexpress.com