In the Union Budget 2025, Finance Minister Nirmala Sitharaman has announced a major allocation of ₹1.5 lakh crore for 50 years interest free loans to the state governments for boosting capital expenditure and development of infrastructure across the country.
This initiative is primarily aimed at motivating states to invest in vital infrastructure projects for the improvement of public services as well as for taking the economy forward. With this, The central government aims to empower states to make substantial capital expenditures without the immediate cost of interest payments by offering long term, interest free loans.
Based on the achievements of the previous years, the Modi government has resolutely put infrastructure-led growth as the priority by pushing PPP projects and asset monetisation. Nirmala Sitharaman has also stated that each of the infrastructure focused ministries will launch a structured three year pipeline of PPP projects, thereby ensuring a systematic approach to development and investment.
The government has also initiated the Second Asset Monetisation Plan for 2025-30 with an aim of raising ₹10 lakh crore. This initiative will generate funds which will be reinvested in new infrastructure projects, thus establishing a sustainable flow of development and economic growth.
During the Union Budget 2025 presentation, the finance minister also announced an allocation of ₹500 crore for setting up a Centre of Excellence in Artificial Intelligence for education. In addition, the budgetary allocation for Jal Jeevan Mission is being increased, so that it reaches out to 100% of the population. The FM also mentioned that incentives will be provided for reforms in the urban sector in areas of governance, urban land management and planning.
In conclusion, Budget 2025 has outlined to provide 50 year interest free loans to states, which is a strategic move of the central government to encourage infrastructure development and economic growth. This move will relieve the states of their financial constraints thus making it possible for them to take on very huge projects that are capable of changing the country’s development.
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