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Out of the ₹1,10,792 crore sanctioned under the scheme, states have availed only ₹29,850 crore in 50-year interest-free capital expenditure (capex) loans, highlighting slow fund absorption. Further, utilisation certificates from nine states remain pending, raising concerns over the pace of infrastructure spending at the state level.
Scheme details and utilisation gaps
The Scheme for Special Assistance to States for Capital Investment was announced in the Union Budget 2024-25 with an outlay of ₹1.5 lakh crore to boost state-level capital expenditure.
The scheme is divided into:
- ₹55,000 crore (untied funds) allocated in proportion to states’ share of central taxes, as per the 15th Finance Commission.
- ₹95,000 crore, linked to state-level reforms and sector-specific projects such as urban planning, land-related reforms, industrial growth, working women’s hostels, vehicle scrappage incentives, and the development of iconic tourist centers.
Despite the availability of interest-free loans, the slow uptake suggests implementation challenges at the state level, delays in meeting reform-linked conditions, and possible fiscal constraints.
Stringent conditions for fund disbursement
For states to access subsequent installments, they must fulfill key conditions, including:
- Utilisation of at least 75% of previously released funds.
- Full compliance with the official names of all Centrally Sponsored Schemes (CSSs).
- Depositing the central share of interest earned in the Single Nodal Agency (SNA) accounts into the Consolidated Fund of India by March 31, 2024.
- Incentives for states achieving a 10% or higher capex growth from their own resources.
(Edited by : Ajay Vaishnav)