Of the Rs 76,000 crore special capex facility of the Central government for states in the current financial year, around `50,000 crore or 66% has been released so far in the year.
The remaining Rs 26,000 crore will likely be disbursed to states in the next 8-10 days, a senior official told FE.
In the revised estimate for FY23, the Centre reduced the outlay for interest-free 50-year loans by 24% from the budget estimate of `1 trillion due to a delay in compliance of many states with conditionalities and failure to submit utilisation certificates of initial installments.
“Around 17 states have submitted their utilisation certificates of the first installment of untied loans. Some states are expected to give an undertaking on the integration of their treasury with the Public Financial Management System and meet other technicalities,” the official said. He said these are being processed before the next installment is released.
Following the finance ministry’s directive to states to comply with the “no-rebranding rule” by November 30 for centrally sponsored schemes to avail of the funds, all states have fallen in line. Odisha, which was the last to comply with the pre-conditions, might not get anything from the facility in FY23.
Some states, which have utilised their full quota from the capex support facility, might get some extra funds if some states fail to utilise their full share. Assam and a few other north-eastern states have fully utilised their quota for FY23.
Most of the approvals and disbursements are for ongoing projects and clearing pending capex bills and some new projects.
The combined capex of 18 states, representing about 80% of the GDP, whose finances were reviewed by FE, contracted by around 6% in the first nine months of FY23 to `2.32 trillion, compared with over 50% growth in the year-ago period.
Including the `30,000 crore 50-year interest-free capex loans by the Centre, which are accounted for once the funds are disbursed by the Centre, the capex by these states grew by 3.7% on year in April-December 2022 period.
To ensure states don’t cut back their capex, the Centre has linked the release of `33,300 crore or a third of the `1 trillion untied capex loans to states in FY24 to their incremental capex in FY24. While the Centre would provisionally release these funds after states achieve 45% of their annual capex target in H1FY24, the amount would be fully recovered from them in FY25 if they fail to meet the investment target by March 2024.
