The Union government has released ₹50,571.42 crore to states under its ‘special assistance for capital investment’ scheme during the first eight months of FY25, according to data from the finance ministry. The initiative aims to boost capital expenditure and fast-track infrastructure projects across the country.
Minister of State for Finance Pankaj Chaudhuri, responding to a question from MP Dilip Saikia in the Lok Sabha, revealed that 23 out of 28 states availed of the interest-free loan facility during the ongoing fiscal year. However, Arunachal Pradesh, Haryana, Kerala, Punjab, and Telangana did not utilize the scheme.
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Uttar Pradesh emerged as the largest beneficiary, receiving ₹7,007.93 crore, followed by Bihar with ₹5,408.88 crore and Madhya Pradesh with ₹5,074.94 crore. Other major recipients included Rajasthan (₹4,552.01 crore), West Bengal (₹4,416.23 crore), Assam (₹3,181.97 crore), Odisha (₹3,085.44 crore), Maharashtra (₹2,617.70 crore), Andhra Pradesh (₹2,616.27 crore), and Karnataka (₹2,272.87 crore).
In her July budget speech, Finance Minister Nirmala Sitharaman announced that the allocation for the scheme had been increased to ₹1.5 trillion for FY25, up from ₹1.3 trillion in the interim budget. A significant portion of this allocation—around ₹88,000 crore or 58%—is tied to states achieving specific “outcomes and reforms.”
Reforms linked to the interest-free loans include measures in the housing sector, incentives for scrapping old government vehicles, urban planning and finance improvements, housing for police personnel, and establishing digital libraries at the panchayat and ward levels for children and young adults.
For loans not tied to reforms, a key criterion requires that the projects funded must be completed within the fiscal year.
The special assistance scheme underscores the Centre’s focus on incentivizing states to enhance capital investments while aligning with broader reform goals, ensuring efficient use of resources and timely project completion.
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