Budget 2025: FM announces 50-year interest free loans to state government

1 Feb 2025 , 12:02 PM

On February 1, 2025, the Finance Minister Nirmala Sitharaman stated in her budget speech 2025 that the state governments will be given interest-free loans for another year, as part of Gati Shakti master plan.

Sitharaman said that it will continue the scheme of a fifty-year interest-free loan for capital expenditure to states. It will have a total outlay of Rs 1.5 lakh crore.

She has announced that the outlay for interest free capex loans to States will be the same as last year. This comes amid concerns over states’ low utilization of these reform-linked loans, as several of them turn to increased revenue expenditure to fund populous cash transfer schemes. 

In her Budget statement on February 1, the Finance Minister made no mention of the overall anticipated expenditure under the government’s Gati Shakti master plan.

The Gati Shakti Master Plan, Prime Minister Narendra Modi’s adopted project, includes holistic policymaking for the seven sub-sectors of infrastructure, having one digital portal that all stakeholders could access for real-time information.

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