Rs 80,000 crore set aside by Center for interest free loans to States

8 Jul 2022 , 10:03 AM

For states carrying out capital projects in the current fiscal year, the Center has set aside Rs 80,000 crore as interest-free loans. The “Special Assistance to States for Capital Investment” program, which will provide states with total financial assistance of Rs. 1 lakh crore in the form of 50-year interest-free loans for capital investment projects, was introduced by Finance Minister Nirmala Sitharaman during her speech on the 2022—23 Budget.

The finance ministry stated that Rs 80,000 crore is set aside for capital works to be carried out by the states when it released the rules for executing the plan.

States must provide the spending section of the Union finance ministry with information about the project’s name, capital outlay, completion date, and economic explanation in order to get the benefit for investments made during this fiscal year.

The Department of Expenditure stated in a letter dated April 6 issued to all state governments that “states are expected to submit capital works scheduled to be taken up by them in 2022-23 to the Department of Expenditure for approval and release of funds.”

PM-supervised projects It is said that the Gati Shakti Master Plan will take precedence. Additionally, the “Special Assistance to States for Capital Investment” program comprises Rs 5,000 crore in interest-free loans that would be given to states as incentives to pursue asset monetization and the privatization or disinvestment of state public sector businesses.

States would be encouraged under this heading to privatize or engage in strategic sales, as well as the transfer of management control of state PSUs, in addition to the listing of PSUs on stock markets.

The spending department noted that these benefits to one state will be capped at Rs 1,000 crore. The “Special Assistance to States for Capital Investment” program allocation, according to Sitharaman’s budget address, will be utilized for PM Gati NSE 0.95 percent Shakti-related and other productive capital investments made by the states.

Additionally, funding would be set aside for revisions to building bye-laws, town planning policies, transit-oriented development, and transferable development rights as well as the digitalization of the economy, including digital payments and the completion of the optical fiber cable network.

In addition, the overall program of Rs. 1 lakh crores comprises Rs. 4,000 crores for the PM Gram Sadak Yojana, Rs. 2,000 crores for a digitalization incentive, Rs. 6,000 crores for urban reforms, and Rs. 3,000 crores for capital projects on the optical fiber cable.