Central loans for state capex set to get easier

Govt may relax some of the reforms conditions to raise capex, growth

- Rhik Kundu

States may find it easier to get 50-year interest-free loans for capital expenditure (capex) from the Centre in the last quarter of the current fiscal year.

The Union government is planning to ease some conditions for giving out these loans under its 'Special Assistance for Capital Investment' scheme, according to two people aware of the development.

The development comes after the country's gross domestic product (GDP) growth slowed to 5.4% in the September quarter, its slowest in nearly two years, due to slower government spending and falling consumption, especially in urban areas, among other factors.

"The idea is to fast-track the disbursement of interest-free capex loans during the last quarter of the fiscal to encourage states to spend more on capital expenditure," the first person mentioned above said.

The second person said the loans are expected to boost state capex spending, particularly on infrastructure projects, to support overall growth. Both persons spoke on the condition of anonymity.