NEW DELHI: The Centre has issued new guidelines for the disbursal of Rs 87,000 crore, or nearly 60% of the Rs 1.5 lakh crore interest-free 50-year capex loans, to the state governments and union territories for FY26. The amount would be transferred to states and UTs largely as untied and project-linked loans.
The balance Rs 63,000 crore capex loans will be linked to reforms, the guidelines for which would be issued later, sources told FE. For the first time, UTs have included in the liberal capex-grant like loans scheme for spreading out capital assets across the country.
Of the Rs 87,000 crore, Rs 55,000 crore is earmarked for states and Rs 2,000 crore has been allocated for the first time to UTs. The Rs 55,000 crore has been allocated among states in proportion to their share of central taxes & duties as per the award of the 15 Finance Commission.
Of the Rs 2,000 crore, Rs 1,200 crore is earmarked for Jammu & Kashmir, Rs 600 Crore for Delhi and Rs 200 crore for Puducherry. Under this category, the first installment of 66% will be released on meeting mandatory conditions while the second installment of 34% will be released after 75% of the fund utilosation from the first installemnt and refund of central share in state nodal agency account of all centrally sponsored schemes migrated to SNA SPARSH by March 31, 2025.
In order to avail benefits of any part of the scheme, in addition to the conditions prescribed under various parts of the scheme, a state government/ UT is required to meet the mandatory conditions. These are in full compliance with the official guidelines for the branding of Centrally Sponsored Schemes (CSSs).
An amount of Rs 15,000 crore will be available to the eligible states and UTs who achieve a growth rate of over 10% in capital expenditure in 2024-25 over 2023-24 and also achieve a growth rate of over 10% in first nine months of 2025-26 over the growth rate in the corresponding period of 2024-25. In FY25, the Centre had made a provision of Rs 25,000 crore assistance for states’ own capex achievements.
An amount of Rs 10,000 Crore is earmarked for to fund State / UT share for completion of major urban and rural infrastructure projects under various schemes/programmes like railway projects, metro rail projects, highway projects, power projects, airports and State/ UT share of infrastructure oriented Centrally Sponsored Schemes like Jal Jeevan Mission, AMRUT, PMGSY.
The State government/ UTs are required to submit a list of projects/schemes for which funds under this part of the scheme are proposed to be applied by October 15, 2025.
Another Rs 5,000 crore is earmarked for capital projects approved in the previous year’s capex loan scheme for housing for police personnel or police stations in urban areas, construction of Unity Malls, children and adolescents’ libraries and digital infrastructure, Iconic Tourist Centres and working women hostels.
Of the Rs 1,49,484 crore capex loans released to the states in FY24, half of that was for reforms or project-linked as outlined in the scheme for special capital assistance for states for FY25.
The Centre has been implementing schemes for special assistance to states for capital expenditure since 2020-21 to support states as well as boost investment-led economic growth. The states submit ongoing as well as new projects for capex support from the Centre under the facility.
Source: The Financial Express
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