Centre OKs Rs 84,884 crore worth of state capex loans, but only Rs 29,518 crore released

The Centre has focussed on boosting economic growth by pushing hard on capital expenditure.

The Central government has approved Rs 84,884 crore worth of long-term, interest free loans to states for far in 2023-24, Minister of State for Finance Pankaj Chaudhary has informed the Parliament.

In a written response to a question in the Lok Sabha on July 31, Chaudhary said the approval from the finance ministry includes capital projects proposed by 21 states.

The approved amount of Rs 84,884 crore is 65 percent of the Centre's Budget estimate of Rs 1.3 lakh-crore Scheme for Special Assistance to States for Capital Investment. These 50-year, interest-free loans are part of the Centre's record capex target of Rs 10 lakh crore for 2023-24.

While Rs 84,884 crore worth of these loans have already been approved, the amount released is much lower at just Rs 29,518 crore, Chaudhary said in his answer in the Lok Sabha. A total of 12 states have received the capex loans – Assam, Bihar, Goa, Haryana, Himachal Pradesh, Madhya Pradesh, Odisha, Rajasthan, Sikkim, Tamil Nadu, Telangana, and West Bengal. According to Chaudhary, the released amount constitutes the first installment under the untied portion of the capex scheme.

The Scheme for Special Assistance to States for Capital Investment has eight parts, with seven of them either linked to reforms or for sector-specific projects. The untied part has the largest allocation of Rs 1 lakh crore.

The amounts approved and released so far in 2023-24 represents a huge improvement from 2022-23. In the last financial year, in which the Centre had budgeted Rs 1 lakh crore for these capex loans to states, Rs 95,147 crore had been approved, but only Rs 81,195 crore was released.

Also Read: Centre confident of meeting Rs 10 lakh-crore capex target, says Finance Secretary Somanathan

With the Centre raising the state capex loan amount by 30 percent to Rs 1.3 lakh crore, the finance ministry had been looking to push ahead with the project approvals at a faster pace in 2023-24.

"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," Finance Minister Nirmala Sitharaman had said on February 2 at a post-Budget industry interaction.

While Rs 29,518 crore has been released to states as capex loans so far in 2023-24, the Centre's overall capital expenditure in the first three months of the financial year has been Rs 2.78 lakh crore - just under 28 percent of the full-year target. As per data released by the Controller General of Accounts on July 31, the Centre's capex in June jumped 62.8 percent to Rs 1.11 lakh crore.