States’ interest-free capex loan may rise 15% in FY27

Only about a third of this year’s 41.5 trillion outlay has been utilized by states so far

- Rhik Kundu

he Centreis likely to raise the allocation for its 50-year, interest-free loan scheme for states—the Special Assistance to States for Capital Investment (SASCI)—by up to 15% in the next financial year, two people aware of the matter said. This is despite only abouta third of this year's 21.5 trillion outlay being utilized, they added.

Disbursements under the scheme touched roughly %50,000 crore by the end of October, against the annual target of 21.5 trillion, the people mentioned above said. The remaining funds are expected to be released in the second half of FY26 as more states complete reform-linked milestones required to access their share.

The central government plans to accelerate disbursements in the coming months to sustain public investmentmomentumand bolster growth.

“Disbursement has been slowin the first half (of FY26), but several states are close to meeting their commitments,” said one of the peoplementioned above, speaking on condition ofanonymity.