The Union government has disbursed ₹1.11 lakh crore approximately, as interest free loans to states between April and January. This money has been disbursed under the Special Assistance to States for Capital Expenditure scheme as detailed in a report by PTI.
Pankaj Chaudhary, Minister of State for Finance shared this information, highlighting the government’s goals and commitments to boosting state level infrastructure. The primary focus is to promote citizen centric reforms and bring about a holistic change, the PTI report elaborated further.
Increased allocation in Budget 2024-25
The Finance Minister, Nirmala Sitharaman, in her budget 2024-25, significantly increased the allocation of these interest free loans to ₹1.5 lakh crore, up from the earlier ₹1.10 lakh crore disbursed in the previous fiscal year. This boost promotes the state governments to invest more in critical infrastructure projects and pursue specific reforms aimed at improving the lives of common citizens.
This scheme primarily operates in two parts. Part one allocates ₹55,000 crores as untied funds. These are distributed to states based on their share of central taxes and duties as laid down by the 15th Finance Commission. This hence provides states with the flexibility to utilize the funds according to their specific needs, priorities and growth based needs.
Now the remaining ₹95,000 crores under the second part is allocated for focused initiatives. These include citizen centric reforms and sector specific projects. Some of the major examples under this scheme are the development of iconic tourist centers on a global scale, incentives for removing old vehicles to promote environmental protection along with measures to stimulate industrial growth and expansion across various states of the country.
Top beneficiary states of FY24
The top beneficiary states of FY24 include Bihar ( ₹11,522 crore), Uttar Pradesh ( ₹10,795 crore), Madhya Pradesh ( ₹10,166 crore) followed by West Bengal ( ₹9,729 crore). These states have effectively leveraged the central government’s support to drive capital expenditure. These funds hence will help in implementing crucial reforms in these states.
