The Centre has sanctioned Rs 1.1 trillion so far in the current financial year, as interest-free 50-year capex loans to states and disbursed as much as Rs 60,000 crore, official sources said.
The current sanctions are 85% of the budgeted amount of Rs 1.3 trillion for FY24 under this programme, aimed to fast-track creation of fixed assets in the economy.
Disbursements so far in FY24 have been more than double the amount released to states under the Scheme for Special Assistance to States for Capital Investment in the corresponding period in FY23, the sources said.
Last year, disbursement was delayed due to delays by states to meet fiduciary conditionalities related to compliance of branding norms of centrally sponsored schemes and sharing of scheme-wise spending data for real-time monitoring of the schemes.
The front-loading of capex loans to states in FY24 helped the Centre meet nearly half of its annual capex target of Rs 10 trillion in H1. Capital expenditure by state governments also surged by 56% on year in the first half of the current financial year compared with just a 2% rise in the year-ago period, supported by capex loans from the Centre. Excluding loans from the Centre, the apex of 18 big states, whose finances were reviewed by FE, rose by a robust 26% in H1FY24 over the year-ago period.
Of the total outlay of Rs 1.3 trillion for capex loans to states in FY24, the tied component is Rs 0.3 trillion.
Due to paucity of time due to a clutch of state elections by end-2023, the Centre has relaxed the norms to release two-thirds of the untied loans amounting to Rs 0.67 trillion in the first instalment itself instead of the earlier plan to release one-third or Rs 0.33 trillion in the first instalment.
The second instalment release of Rs 0.33 trillion would depend on states’ achieving 45% of their annual capex target (excluding central loans) by October and submitting utilisation certificates for 75% of the funds released to them in the first instalment.
Even though the capex disbursements in FY24 are being frontloaded and may cross Rs 1 trillion, but may fall short of the Rs 1.3 trillion target due to conditionalities that may not be fully met by some states. In FY23, the states provided Rs 81,200 crore as against the budget provision of Rs 1 trillion as some states could not fully meet the conditionalities.