The Centre’s capex loan disbursement to states may reach around Rs 90,000 crore or nearly two-thirds of the FY25 target of Rs 1.5 lakh crore by December, as it accelerates the pace of releases to make up for the delay in rolling out tied loans.
Of the Rs 1.5 trillion grant-like loans earmarked for FY25, Rs 95,000 crore or two-thirds, is linked to reforms and other criteria specified by the Centre for States including capex, efforts to stimulate industrial growth, assistance for completion of major infra projects, urban and rural land reforms, etc. The balance of Rs 55,000 crore is untied advances to states for projects identified by them.
So far, the Centre has sanctioned in aggregate Rs 70,000 crore loans to various states while disbursement stood at around Rs 40,000 crore. The sanction and disbursements got delayed due to general elections in the first quarter of the financial year.
“Around Rs 25,000 crore is likely to be released in November and another Rs 25,000 crore is expected in December,” a senior official said, adding that the government was hopeful of meeting the full-year target.
Of the tied loans, the government has started disbursements linked to states’ capex performance, state’s share of projects under centrally sponsored schemes and joining the single nodal agency model for just-in-time release of funds for centrally sponsored schemes.
The Centre has allocated Rs 25,000 crore of ‘tied’ funds as an incentive for states’ capex performance in FY25. Another Rs 15,000 crore has been allocated to finance the state’s share for the completion of major urban and rural infrastructure projects as well as the state’s share of projects under centrally sponsored schemes.
In the regular Budget presented on July 23, the 50-year interest-free capex loan outlays were enhanced by Rs 20,000 crore to Rs 1.5 trillion compared with Rs 1.3 trillion in the interim budget even as the Centre kept its overall capex budget unchanged at Rs 11.11 trillion.