Of the Rs 1-trillion grant-like special capex facility for states, around Rs 85,000 crore or 85% has been sanctioned to them so far in the current financial year, sources told FE. Of this, Rs 46,000 crore has already been utilised by the states.
“We expect 98-99% of the capex loan facility to be utilised by the states in FY23,” a senior official told FE. All states, except Odisha, have availed of the Centre’s capex facility.
Following the finance ministry’s directive to states to comply with the “no-rebranding rule” for centrally sponsored schemes by November 30 to avail of the funds, Telangana, Rajasthan and West Bengal have fallen in line. Odisha has written to the Centre that it has complied with the pre-conditions to avail of the facility. Central ministries are verifying its compliance before the release of funds to the state.
States lose out if they don’t meet the Centre’s norm of not changing the original name of centrally sponsored schemes.
Of the Rs 1-trillion interest-free 50-year capex loan facility, Rs 80,000 crore would be released proportionately to the states’ share in the devolution of central taxes and for projects solely based on their viability. The release of the balance `20,000 crore is linked to infrastructure connectivity projects such as laying optical fibre cables for last-mile connectivity under BharatNet in rural areas, the state component of the PM Gram Sadak Yojana, projects under the GatiShakti master plan and urban sector reforms.
Last month, the Centre also included states that are scrapping vehicles older than 15 years and offering road tax concessions to people buying a new vehicle in lieu of junking their old vehicles, under the special conditional loans with a sub-limit of `2,000 crore for the scrappage scheme.
Most of the approvals and disbursements are for ongoing projects and clearing pending capex bills, but some new projects are also covered.
Of the special conditional loans of Rs 20,000 crore, over Rs 10,000 crore has already been released to states so far in the current fiscal.
Despite the support from the Centre, the combined capex of 18 states whose finances were reviewed by FE was up just 7.5% on year at Rs 2.41 trillion in April-November of the current fiscal. The annual growth was 70% over the year-ago period, aided by a favourable base. These states have budgeted capex of Rs 6.3 trillion for FY23, an increase of close to 40% over the FY22 actuals.
Despite increased fiscal space, state governments have shown no inclination to accelerate capex vis-a-vis budget targets, indicating their concerns about elevated debt levels after the pandemic.
The Centre will likely meet the budgeted capex target of Rs 7.5 trillion, including the Rs 1-trillion support to states for FY23, up 27% from the actual spending of Rs 5.93 trillion in FY22. It is expected to continue the 50-year interest-free capex loans for FY24 as well, with an allocation of Rs 1 trillion or more.