(MENAFN- KNN India)
New Delhi, Nov 12 (KNN) The Indian government is preparing to disburse between Rs 50,000 crore and Rs 70,000 crore to states during the third quarter of fiscal year 2025 under its 'special assistance for capital investment' scheme.
This significant financial injection aims to accelerate infrastructure development and boost overall economic growth, following a period of slower expenditure during the first two quarters due to general elections, reported Mint.
The disbursement, which provides states with interest-free loans carrying a 50-year tenure, has been strategically delayed due to the electoral process in the first quarter of FY25.
Officials familiar with the matter indicate that the release of funds will be contingent upon states meeting specific performance criteria.
The scheme, first implemented in FY21, has emerged as a crucial tool for stimulating state-level capital expenditure in the post-pandemic recovery period.
In the previous fiscal year, sixteen states participated in the program, including major economies such as Gujarat, Karnataka, Tamil Nadu, and West Bengal.
Finance Minister Nirmala Sitharaman announced an increased allocation of Rs 1.5 trillion for FY25, up from the interim budget target of Rs 1.3 trillion.
Notably, 58 per cent of this allocation, approximately Rs 88,000 crore, is tied to specific reforms and outcomes at the state level.
These reforms encompass various sectors, including housing development, vehicle modernisation, urban planning, police infrastructure, and digital library establishment at local governance levels.
The government maintains that funded projects must be completed within the fiscal year, although some existing reform conditions may be revised and new ones introduced to enhance policy implementation effectiveness.
In a recent interview, Finance Minister Sitharaman emphasised the importance of utilising these funds within a 12-month timeframe, noting that projects completed within this period have shown exceptional results, despite some capital expenditure projects typically requiring longer completion periods of 24 to 36 months.
The Ministry of Finance has not officially commented on these developments when approached for clarification.
State governments have been advised to treat these funds as supplementary to their existing capital expenditure plans rather than as substitutes.
(KNN Bureau)
MENAFN12112024000155011030ID1108877932
Legal Disclaimer:
MENAFN provides the information “as is” without warranty of any kind. We do not accept any responsibility or liability for the accuracy, content, images, videos, licenses, completeness, legality, or reliability of the information contained in this article. If you have any complaints or copyright issues related to this article, kindly contact the provider above.