By December, the Center is expected to disburse approximately Rs 90,000 crore in capex loans to states, which is almost two-thirds of the FY25 target of Rs 1.5 lakh crore. This expedited pace of disbursements aims to compensate for the delayed rollout of tied loans.
Out of the total Rs 1.5 trillion designated for grant-like loans in the fiscal year 2025, approximately Rs 95,000 crore, equivalent to two-thirds of the amount, is contingent upon states meeting specific criteria set by the Center. These criteria encompass various reforms such as capital expenditure, initiatives to boost industrial development, support for the finalization of crucial infrastructure ventures, urban and rural land reforms, and more. On the other hand, the remaining Rs 55,000 crore is unrestricted funding allocated to states for projects of their choosing.
The Center has approved a total of Rs 70,000 crore in loans to different states, with disbursements totaling approximately Rs 40,000 crore. The delay in sanctioning and disbursing funds was attributed to the general elections held in the initial quarter of the fiscal year.
A senior official has mentioned that approximately Rs 25,000 crore is set to be disbursed in November, followed by another Rs 25,000 crore in December. The government is optimistic about achieving the annual target.
The disbursements tied to states’ capital expenditure performance, their share of projects under centrally sponsored schemes, and their participation in the single nodal agency model for the timely release of funds for centrally sponsored schemes have been initiated by the government among the interconnected loans.
In support of states’ capital expenditure performance in the fiscal year 2025, the Central government has earmarked Rs 25,000 crore of dedicated funds. Additionally, Rs 15,000 crore has been designated to assist in funding the state’s contributions towards concluding significant urban and rural infrastructure endeavors, along with state-supported initiatives under centrally sponsored programs.
The standard Budget unveiled on July 23 saw a boost of Rs 20,000 crore in the 50-year interest-free capex loan disbursements, increasing them to Rs 1.5 trillion from Rs 1.3 trillion in the provisional budget. Meanwhile, the central government maintained its total capex budget at Rs 11.11 trillion.
