Capex loans give a leg-up to land reforms in states

THE CENTRE'S INTEREST-FREE 50-year soft capex loans have yielded good results, with states modernising building codes to spur industrial growth and the digitisation of land records.

- PRASANTA SAHU

These reforms are expected to boost the rural economy by reducing litigation and improving access to credit.

The Scheme for Special Assistance to States for Capital Investment (SASCI) has evolved from an initial ₹12,000 crore in 2020-21 (during the Covid-19 pandemic) to ₹1,50,000 crore in 2024-25, transforming it into a key policy lever that incentivises critical reforms across states.

Of the ₹1,49,484 crore in capex loans disbursed to states in FY25, half was tied to various reforms or project-specific conditions outlined in the scheme.

Under the scheme, untied funds are allocated for priority state projects, while tied funds are conditional on the implementation of specific reforms. In FY25, the Centre allocated ₹5,000 crore each to incentivise urban and rural land reforms.