Of the Rs 1.3-trillion grant-like special capex facility for states in FY24, the Centre has approved Rs 25,727 crore or 20% to nine states in the first two months of the year.
Of this, Rs 3,763 crore has already been released to Rajasthan in May while Karnataka, Goa, Gujarat, Haryana, Odisha, Sikkim, Tamil Nadu and Telangana will receive their relevant share soon after due diligence of their proposals.
“The capex loans programme is progressing well,” a senior official said.
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The outlay for the current year is Rs 1.3 trillion, with an untied component of Rs 1 trillion. An early release would ensure the resultant investments by them are evenly spread out during the year to produce a large growth multiplier.
Last year, when this special capex outlay was scaled up by more than six times to Rs 1 trillion, the release of funds started as late as October, owing to the fiduciary conditions and time taken by states to comply with them. The capex loans release stood at about Rs 81,200 crore in FY23.
This problem is not there in the current financial year because all states are now on board, and are in compliance with the fiduciary conditions.
The untied funds in FY24 would be released to states in three equal instalments. The first instalment of 33.3% (Rs 33,300 crore) would be released to each state government on meeting three basic conditions: adhering to branding norms for central schemes, sharing of scheme-wise spending data, and proof of deposit of the Centre’s share of the interest earned in Single Nodal Agency (SNA) account for each scheme.
The second instalment of untied funds would be released on utilisation of at least 75% of the first. The third instalment under this part would be disbursed on utilisation of 75% of the amount released in the first two and on meeting 45% of the total target fixed for capex by each state in FY24.
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Accordingly, the states in aggregate would have to invest Rs 6.12 trillion in FY24, excluding capex support given by the Centre and their debt repayments.
While the Centre would release the third instalment of untied funds if states achieve 45% of their annual capex target in H1FY24, the amount would be recovered from them in FY25 if they fail to meet the annual investment target by March 2024.