Capex loan sanctions by Centre reach Rs 0.94 trillion
The Centre’s interest-free loan disbursement to state governments for asset-creating projects has reached Rs 0.54 trillion or 57% of the sanctioned amount for FY24 in the first half of the year.
Of the Rs 1.3 trillion 50-year capex loan facility for states in FY24, the Center has already issued sanction letters totalling Rs 0.94 trillion to states in H1FY24.
During the month of September 2023, untied capital expenditure worth Rs 16,006 crore was released to the eligible states under the Scheme for Special Assistance to States for Capital Investment 2023-24.
Aided by the front-ending of capex loans by the Centre, the state governments’ capital expenditure seems to have grown at a much higher pace in the April-August period of the current financial year than in the year-ago period.
The combined capex of 17 big states, whose finances were reviewed by FE, rose by 45% to around Rs 1.67 trillion in the first five months of the current fiscal, compared with Rs 1.15 trillion in the year-ago period.
Of the total outlay of Rs 1.3 trillion for capex loans to states, the tied component is Rs 0.3 trillion.
Due to paucity of time due to a clutch of state elections by end-2023, the Centre has relaxed the norms to release two-thirds of the untied loans amounting to Rs 0.67 trillion in the first instalment itself instead of the earlier plan to release one-third or Rs 0.33 trillion in the first instalment.
The last instalment of Rs 0.33 trillion under the untied part would be disbursed on utilisation of 75% of the amount released in the first and on meeting 45% of the total state budget target fixed for capex by each state in FY24 in April-September.
The states which have already received sanction and getting loan disbursement include Uttar Pradesh, Karnataka, Madhya Pradesh, Odisha, Rajasthan, Tamil Nadu, Telangana, West Bengal, Bihar, Chhattisgarh, Goa, Gujarat, Haryana and Himachal Pradesh.
Even though the capex disbursements in FY24 are being frontloaded and may cross Rs 1 trillion, but may they fall short of the Rs 1.3 trillion target due to conditionalities that may not be fully met by some states.
