FM Sitharaman sees quick rollout of states' interest-free capex loan scheme in FY24

File image of FM Nirmala Sitharaman

Finance Minister Nirmala Sitharaman expects several states to submit project proposals in the first month of 2023-24 itself under the special long-term loan scheme they can avail for capital expenditure.

"This year we have been talking with the chief secretaries of the state governments, to say that this moves fast and moves early. So my strong belief is that in the month of April itself, there should be a substantial number of proposals coming from many states so the release (of funds) can happen straight away," the finance minister said on February 2 at a post-Budget industry interaction.

In the Budget Sitharaman presented on February 1, the Centre set itself a capex target of Rs 10 lakh crore for 2023-24. This includes Rs 1.3 lakh crore as 50-year, interest-free loans for states, up from Rs 1 lakh crore budgeted for 2022-23.

However, states have not been able to utilise this pool of resources in the current financial year. As such, the Centre revised the estimate for capital expenditure for 2022-23 down to Rs 7.28 lakh crore from Rs 7.5 lakh crore.

Finance Secretary TV Somanathan had said on February 1 that the Rs 1 lakh crore could not be fully utilised as some states had not been able to meet some of the reform-related conditions that applied for 20 percent of the total funds available.

However, today, Sitharaman said discussions had already taken place with states over the capex loans scheme for 2023-24 and its structure.

"So all the differences have been ironed out and I expect the project proposals from the states to come early in April itself. So unlike last year, this year it will start rolling out faster," she said.

Commenting on the increase in the loan allocation to Rs 1.3 lakh crore, Sitharaman said the Centre felt there was a "good appetite" for more funds.

"This year (2023-24), too, it (capex loan scheme) will have a good share which will be left to the discretion of the states to use the way they want it and also a portion of it subject to conditions, one of which is municipalities being encouraged to go for municipal bond issues," she added.