MC EXCLUSIVE Centre pushes for EoDB through capex loans to states scheme

The states/UTs are told to amend building regulations to reduce land loss in industrial and commercial plots

The central government is nudging states and union territories (UTs) to undertake comprehensive reforms related to compliance reduction & deregulation for Ease of Doing Business (EoDB). In the current financial year FY26, the finance ministry has earmarked Rs 5,000 crore under the 'Scheme for Special Assistance to States for Capital Investment' (SASCI) for implementing reforms linked to EoDB, two senior officials told Moneycontrol.

The SASCI, launched in 2020-21, is a programme of the central government, which aims to provide financial support to state governments in the form of 50-year interest-free loans to boost capital expenditure, thereby stimulating economic growth, creating employment opportunities, and enhancing infrastructure development across the country.

The SASCI provides 50-year interest-free loans to states through two channels: untied funds for priority state projects, and tied funds conditional on implementing specific reforms. Through the tied component, the ministry in the recent years has pushed states to modernise building codes, digitise land records, scrap old government vehicles, and implement financial management reforms.

For EoDB, the Centre has categorised the states into three different groups – small, medium & big. The incentive (loan) shall be allocated to the states on 'first come-first serve' basis, based on reforms undertaken in two priority areas – land, and building & construction, the sources said.

For land reforms, states/UTs are recommended to adopt flexible zoning framework for mixed-used development activities; simplify and digitize the process of land use change in rural/urban areas; and rationalise minimum road width requirements for different categories.

The states/UTs are also told to amend building regulations to reduce land loss in industrial and commercial plots, and simplify the process of issuing occupation/completion certification of buildings, the officials say.

Post undertaking the reforms, the states shall submit a report to the Ministry of Housing and Urban Affairs for examination, and subsequent to the Department of Expenditure, for claiming incentives under the SASCI.

In FY25, through the SASCI, 22 states carried out reforms in Building Byelaws for industrial & commercial plots, 18 reduced land wastage in setbacks and parking for standalone factories to less than 30%, and 12 states doubled built-up area permitted for flatted factories. Further, 8 states increased Floor Area Ratio (FAR) for commercial buildings to 5 in normal areas and 7 in Central Business Districts, said sources.