The Centre’s interest-free capex loans to states reached Rs 44,544 crore till July 15 of the current financial year, nearly 50% more than in the year-ago period, latest data showed.
Under the FY27 capex loan scheme, the Centre has budgeted Rs 2 lakh crore for states. The funds will support infrastructure spending, state capex growth and critical projects including railways, highways, metro rail, power and water supply schemes.
The Scheme for Special Assistance to States for Capital Investment (SASCI) has expanded significantly since its launch during the Covid-19 pandemic, with an outlay of Rs 12,000 crore in 2020–21.
Over the years, it has evolved into a key policy instrument to spur public investment and incentivise reforms, with allocations rising to Rs 1.5 lakh crore in both FY25 and FY26. For the first time, states fully utilised the FY26 allocation, with more than 9,000 projects across the country benefiting from the scheme.
A large part of the loan releases in the current financial year so far comprise the first instalment — amounting to 66% — under the untied component of the scheme, along with allocations linked to capex performance, a special window for hill states, and funding support for critical centrally sponsored schemes.
For context, capex loan releases were in the range of Rs 30,000 crore during April-July of FY26.
Under SASCI for FY27, Rs 75,000 crore has been earmarked under the untied component. Of this, 66% will be released as the first instalment, while the remaining amount will be disbursed after states utilise 75% of the initial tranche.
In addition, Rs 25,000 crore has been allocated based on states’ own capex performance. Around 50% of this amount will be awarded to states and Union Territories that achieve more than 10% growth in capital expenditure in 2025–26 over the previous fiscal year.
