States may get 15% more soft loans for capex

THE CENTRE IS likely to top up the 50-year interest-free capex loans to states by 15% to ₹1.5 trillion in 2024-25 from ₹1.3 trillion provided in the interim Budget. This is because of the increased demand from states for the liberal loan facility aimed at boosting economic activity across the country.

- PRASANTA SAHU

Sources told FE that the additional amount is expected to be part of the reform-linked component of the loans as the Centre embarks on next-generation reforms. Accordingly, the reform-tied loans would rise to ₹95,000 crore from ₹75,000 crore earmarked in the interim Budget for FY25.

To strengthen the hands of the states, the scheme for providing financial assistance to the states for capital expenditure introduced in Covid-hit FY21 has been extended to FY25 as well with an outlay of ₹1.3 trillion.

Of this, ₹55,000 crore in untied capex loans has been rolled out from April 1. The reform/project-linked ₹75,000 crore, which will likely be increased to ₹95,000 crore, will be rolled out after the new government is formed in June.

Besides reforms touching on each of the factors of production, the Modi government would likely extend investment and legislative support to key sectors.