NEW DELHI: The Centre will likely roll out 58% of the Rs 1.3 trillion interest-free capex loan facility for states in 2024-25 after general elections to avoid controversies as those would be reform-linked to boost economic growth to make India a developed nation.
To strengthen the hands of the states, the scheme for providing financial assistance to the states for capital expenditure introduced in 2022-23 has been extended to 2024-25 as well with an outlay of Rs 1.3 trillion as against the revised estimate of Rs 1.06 trillion for FY24 as against the FY24 budget estimate of Rs 1.3 trillion. The reduction in FY24 was due to non-fulfilment of fiduciary conditions by some states. The 50-year loans have helped states register a 40% growth in capex in April-December of FY24 compared with a 7% rise in the year-ago period, according to FE analysis.
“The Rs 55,000 crore untied capex loans could be rolled out from April 2024. The reform linked Rs 75,000 crore will likely be after the new government is formed,” an official said. The official said the conditionalities are still being worked out for the tied loans.
“Many growth and development enabling reforms are needed in the states for realising the vision of ‘Viksit Bharat’. A provision of seventy-five thousand crore rupees as a fifty-year interest-free loan is proposed this year to support those milestone-linked reforms by the State Governments,” Finance Minister Nirmala Sitharaman said in her Budget speech on February 1.
According to the ‘Viksit Bharat @2047’ document, which will be unveiled in early March, India will aim for a $30 trillion economy by 2047 to become a developed nation in the 100th year of independence, propelled by radical policy changes and reforms in governance by 2030.
India’s growth is closely interlinked with the growth of states. This will be the guiding spirit of India’s inclusive and sustainable vision for the next quarter century. Besides the Centre, states such as Uttar Pradesh, Tamil Nadu, Andhra Pradesh, Gujarat, Karnataka, Odisha, Uttarakhand and Goa are also preparing their own vision documents.
Even though India has become the most populous country for the first time in recorded history by overtaking China, it has to fix structural issues including accelerating investment in health-education and undertake land-labour reforms to boost economic growth and create more jobs before the demographic dividend peters out.
In the current financial year, out of the initial budget outlay of Rs 1.3 trillion, Rs 30,000 crore was tied to reforms and specific projects. According to the norms for the capex loan scheme for FY24, the first instalment of 66.6% untied loans was to be released to each state government on meeting three fiduciary conditions: adhering to branding norms for central schemes, sharing of scheme-wise spending data, and proof of deposit of the Centre’s share of the interest earned in Single Nodal Agency (SNA) account for each scheme.
The second instalment of untied funds was to be released on utilisation of 75% of the amount released in the first instalment and on meeting 45% of the total target fixed for capex by each state in FY24.
The tied component was linked to states for urban planning reforms for efficient use of land resources, adequate resources for urban infrastructure, transit-oriented development, and enhanced availability and affordability of urban land. Other conditionalities included reforms in urban local bodies, Unity Malls in state capital cities, promotion of the concept of “one district, one product”.
Source: The Financial Express
