Centre Links 40% of State Capex Loans to New Reforms

The focus will be on digitization, governance, land records, agriculture and urban planning

- Rhik Kundu

The Centre has drawn up a new set of reform-linked conditions for states to access a portion of the ₹1.5 trillion interest-free capex loan for FY26, two people aware of the matter said, with a focus on digitization, governance, land records and urban planning.

"States will now be required to implement targeted reforms in key areas including digital public infrastructure (DPI) for agriculture, improvements in financial management systems, better urban planning, and streamlined land-related processes," said the first person mentioned above, speaking under the condition of anonymity.

Of the ₹1.5 trillion earmarked for FY26, around 60% will be unconditional or linked to infrastructure spending, while the remaining 40% will be tied to reforms that states and Union territories must undertake to access the funds, the person mentioned above added.