Centre releases Rs 1.11 trillion interest-free loans to states in Apr-Jan

The Centre has released about Rs 1.11 lakh crore loan to states during April-January under the scheme for special assistance to states for capital expenditure, Minister of State for Finance Pankaj Chaudhary said on Monday.

In the 2024-25 Budget, Finance Minister Nirmala Sitharaman hiked the allocations for interest-free loans to states for capital expenditure, enabling states to spend more on infrastructure and specified reforms. The allocation was hiked to Rs 1.5 lakh crore, up from disbursal of Rs 1.10 lakh crore made in 2023-24.

In a written reply in the Lok Sabha, Chaudhary said under the scheme for special assistance to states for capital expenditure, the Centre has approved loans worth Rs 1.22 lakh crore till January 31. Of this, about Rs 1.11 lakh crore has been released.  Chaudhary said out of the total allocation of Rs 1.50 lakh crore, an amount of Rs 55,000 crore under Part-I of the scheme is untied. This amount has been allocated to the states in proportion to their share of central taxes and duties as per the award of the 15th Finance Commission.

The remaining amount of Rs 95,000 crore is inter-alia earmarked for reforms in certain citizen centric areas and taking up sector specific projects like development of iconic tourist centres on global scale; incentive for scrapping of old vehicles; stimulating industrial growth.

According to the data, the top beneficiary states so far in FY24 are Bihar (Rs 11,522 crore), followed by Uttar Pradesh (Rs 10,795 crore), Madhya Pradesh (Rs 10,166 crore), and West Bengal (Rs 9,729 crore).