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Business News/ Budget / Budget 2024: 75,000 cr provisioned for milestone-linked reforms in states
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Budget 2024: ₹75,000 cr provisioned for milestone-linked reforms in states

These interest-free capex loans will be provided to states for meeting specific reforms

Finance minister Nirmala Sitharaman said the loan scheme to meet the capital expenditure requirements of states will be continued this year with an outlay of ₹1.3 lakh crore.Premium
Finance minister Nirmala Sitharaman said the loan scheme to meet the capital expenditure requirements of states will be continued this year with an outlay of 1.3 lakh crore.

NEW DELHI : State governments will get 75,000 crore for milestone-linked reforms, finance minister Nirmala Sitharaman said Thursday while presenting her sixth Union Budget. The provision will be provided through a 50-year interest-free loan, she said. 

“The provision of 75,000 crore, as a 50-year interest-free loan, is proposed this year to support milestone-linked reforms by state governments," Sitharaman said presenting the Union Budget for 2024-25.

The finance minister said the 50-year interest-free loan scheme to meet the capital expenditure requirements of states will be continued this year with an outlay of 1.3 lakh crore.

Introduced in FY21, the loan scheme with a tenure of 50 years has played a vital role in stimulating capital spending by states and catalysing the overall economy in the aftermath of the pandemic.  

Conditions that states need to meet to avail these loans include reforms in the housing sector; providing incentives for scrapping old government vehicles and ambulances; reforms in urban planning and urban finance; increasing housing stock for police personnel; and establishing libraries with digital infrastructure at panchayat and ward levels for children and young adults. 

According to finance ministry data, proposals totaling 95,147.19 crore were approved, and 81,195.35 crore of loans were disbursed to the states in FY23 under the scheme. 

For FY24, the government said in December that it had released about 60,104 crore in interest-free capital expenditure loans to states, out of the 80,000 crore earmarked for the financial year.  

The loans fall under a Union government scheme called ‘Special Assistance to States for Capital Investment’, which was introduced during the early days of the Covid-19 outbreak. 

In FY23, the government had disbursed 81,195.35 crore to 28 states under the scheme, significantly higher than the 11,830.29 crore and 14,185.78 crore disbursed in FY21 and FY22, respectively.  

In FY24, till December-end, the government had disbursed 60,104 crore to 24 states. Andhra Pradesh, Kerala, Manipur, and Punjab were not eligible for the loans as these states didn’t meet specific reform conditions. 

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ABOUT THE AUTHOR
Gulveen Aulakh
Gulveen Aulakh is Senior Assistant Editor at Mint, serving dual roles covering the disinvestment landscape out of New Delhi, and the telecom & IT sectors as part of the corporate bureau. She had been tracking several government ministries for the last ten years in her previous stint at The Economic Times. An IIM Calcutta alumnus, Gulveen is fluent in French, a keen learner of new languages and avid foodie.
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Published: 01 Feb 2024, 12:37 PM IST
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