In a goodwill gesture to states, Finance Minister Nirmala Sitharaman on Thursday said the Centre may convert trillions of rupees given by the Centre to states may be converted into a ‘grant’.
Since the Centre launched the ‘Scheme for Special Assistance to States for Capital Expenditure’ to help states post-Covid, it has released Rs 2.17 trillion and is estimated to give another Rs 1.5 trillion FY25, taking the total to Rs 3.7 trillion during FY21-FY25.
Unlike loans, grants are not repaid.
“We are making states also take up capex by giving them interest-free 50-year loans which eventually will probably be treated as grants only,” Sitharaman said replying to the debate on Finance Bill 2025. “So, states are now able to strengthen their capex and as a result, many states are completing long-pending projects or taking up newer projects,” she said.
The minister said Prime Minister Narendra Modi’s emphasis on capital expenditure after Covid hit FY21 has helped India emerge as the fastest growing economy even since and may continue to be so in FY25 as well.
The Rajya Sabha approved the Finance Bill, completing the FY25 Budget approval process. She said the Budget balanced different overriding imperatives, including growth, jobs, capex, and fiscal consolidation.
“This route Prime Minister Modi has clearly identified…not only helping meeting the domestic challenges of reviving economy post Covid, but also meeting increasing number of global number of challenges,” she said.
On concerns raised by some members regarding haircuts in insolvency cases, Sitharaman said defaulting promoters are not allowed to re-bid for their own company so that “we don’t have them coming through the back door & getting it for lesser price”.
Sitharaman said that more funds have been given to agriculture and allied sectors.
“(As much as) Rs 1.44 trillion was the allocation last year, this time it has gone up to Rs 1.52 trillion, that is Rs 8,000 crore more,” she said.
Address the concerns of members on household savings, she said: “Small savings is alone not the portfolio. People have found different portfolios which are helping them. Financial household savings today have to include other portfolios which are available to small families.