The Centre has fully met its FY26 target for extending 50-year interest-free loans to states for capital expenditurecapital expenditure, disbursing about Rs 1.5 lakh crore so far.
Latest official data show that loans worth Rs 1.54 lakh crore have been sanctioned for 9,099 projects across states, underscoring the scale and reach of the initiative.
The Scheme for Special Assistance to States for Capital Investment (SASCI) has expanded significantly since its launch during the Covid-19 pandemic, when it began with an outlay of Rs 12,000 crore in 2020-21. Over the years, it has evolved into a key policy instrument to spur public investment and incentivise reforms, with its allocation rising to Rs 1.5 lakh crore in 2024-25.
Rs 1,49,484 crore disbursed in FY25
Notably, of the Rs 1,49,484 crore disbursed in FY25, nearly half was linked to reforms or specific project milestones, reflecting a growing emphasis on accountability and outcomes.
Cumulatively, the Centre has disbursed Rs 4.88 lakh crore since the liberal capex support scheme was rolled out to evenly spread out assets across the country for holistic development.
In FY26, the scheme was initially structured into ten components, spanning Part I to Part X. Of the total outlay, Rs 68,000 crore was earmarked under Part I as untied funds, allowing states to propose and execute capital projects based on their own priorities. Another Rs 80,000 crore was allocated for reform-linked and sector-specific initiatives.
Subsequently, the Centre introduced relaxations to expand the untied portion, providing greater flexibility to states with strong implementation capacity to undertake projects of their choice.
Centre to continue with long-term, interest-free capex loans?
The Centre has indicated that it will continue with these long-term, interest-free capex loans—first introduced in FY21—as a key tool to support economic growth. In the Union Budget for 2026-27, the allocation under SASCI has been increased to Rs 2 lakh crore, marking a rise of Rs 50,000 crore, or nearly 33% over the previous year.
The enhanced outlay is aimed at accelerating asset creation across critical infrastructure sectors such as roads, bridges, water supply, and urban development, while also reinforcing the Centre’s broader strategy of crowding in state-level capital investment to sustain growth momentum.