The Centre has disbursed about Rs 32,500 crore as 50-year interest-free capex loans to the state governments so far, as against sanctioned amount of Rs 65,000 crore, official sources told FE.
Of the Rs 1 trillion grant-like special capex facility, at least Rs 90,000 crore or 90% would be utilised by March even if a couple of states fail to avail of the facility for not meeting basic conditions.
“Most of the states are in the process of submitting utilisation certificates for the first tranche of 50% of the sanctioned amount. We expect to disburse the entire sanctioned amount of Rs 65,000 crore in another month or so,” a senior official told FE.
Following the finance ministry’s “final chance” to four states — West Bengal, Rajasthan and Odisha – asking them to comply with the “no-rebranding rule” regarding the centrally sponsored schemes by November 30 to avail themselves of the funds, Telangana and Rajasthan are understood to have fallen in line.
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Officials are hopeful that West Bengal and Odisha would comply with branding guidelines to not miss out on the grant-like capex funds from the Centre. Non-compliance will lead to the re-allocation of their quotas of the capex loan to other states, the sources said.
“We will try to give the entire Rs 1 trillion funds to states to boost their capex,” the official said.
The Centre launched a Rs 1 trillion scheme for FY23 to help states maintain their capital expenditure momentum, even after the end of the goods and services tax (GST) compensation.
Most of the approvals and disbursements are for ongoing projects and clearing pending capex bills, but some new projects are also covered.
The beneficiary states so far include Uttar Pradesh, Tamil Nadu, Bihar, Chhattisgarh, Karnataka, Maharashtra, Haryana, Madhya Pradesh, Jharkhand, Goa, Himachal Pradesh, Meghalaya, Assam, Manipur, Nagaland, Sikkim, Arunachal Pradesh and Tripura.
States lose out if they don’t meet the Centre’s norm that they can’t change the original name of centrally sponsored schemes, a key condition for availing funds.
The Centre’s view is that even though it spends annually over Rs 4 trillion under these schemes, many states, especially those ruled by non-BJP parties, have changed many schemes’ names to deny credit to it. The capex support facility has given it a handle to fix this issue.
Of Rs 1 trillion capex 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 Rs 20,000 crore is linked to infrastructure connectivity projects such as the laying of 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.
The state governments have slowed down their capital expenditure in the first six months of the current fiscal to accommodate higher revenue spending even as they continue to curb borrowings. The combined capex of nineteen states whose finances were reviewed by FE was up just 2% on year at Rs 1.67 trillion in April-September of the current fiscal. The growth was 80% in the year-ago period albiet on a favourable base.
The Centre has budgeted a capex of Rs 7.5 trillion including, Rs 1 trillion support to states for FY23, up 27% from the actual spending of Rs 5.93 trillion in FY22.