Center to cut capex loan to states re-branding schemes

Half a dozen states, mostly Opposition-ruled ones, may lose out on the 50-year interest-free loans for capital expenditure in FY23 if they don’t meet the Center’s norm that they can’t change the original name of centrally sponsored schemes being funded.

So far in the current fiscal, the Center has sanctioned about Rs 40,000 crore, or about 50% of the untied (unspecified projects or reforms) component of the interest-free capex loan, to 16 states. “The sanctions could have been made by now for the entire Rs 80,000 crore component had all states complied with the condition that no re-branding of the centrally sponsored schemes will be allowed,” an official said. “This condition won’t be relaxed. If the non-compliant states don’t get the schemes’ names corrected, others would be provided additional funds,” the official said.

The schemes being renamed by some states include PM Awas Yojana, for rural housing and health and life insurance schemes.

The Center’s view is that even though it spends annually over Rs 4 trillion under the centrally sponsored schemes, many states, especially those ruled by non-BJP parties, have changed many schemes’ names to deny credit to it. The capex support gave it a handle to fix this issue.

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Most states are in the process of meeting the other condition for availing themselves of the loan which is integration of state treasuries with the Center’s Public Financial Management Systems (PFMS), by providing scheme-wise data.

The Center was confident that the entire Rs 1 trillion capex loan would be fully utilized by states in FY23 in compliance of guidelines issued for availing the loans for asset creation.

Release of Rs 20,000 crore is linked to infrastructure connectivity projects such as laying of optical fiber cables for last-mile connectivity under BharatNet in rural areas, the state component of the PM Gram Sadak Yojana, projects under the GatiShakti master plan and urban sector reforms.

Of the both of the loans, roughly Rs 3,000 crore have been disbursed and the balance will be transferred to the states very soon as states are in the verge of project components specific preparatory works.

The beneficiary states so far include Uttar Pradesh, Karnataka, Maharashtra, Bihar, Chattisgarh, Goa, Manipur, Nagaland, Sikkim and Himachal Pradesh, among others. Most of the approvals were for ongoing projects and clearing pending capex bills, as well as some new projects.

The Center has budgeted a capex of Rs 7.5 trillion including Rs 1 trillion support to states for FY23, up 27% from the actual spending of Rs 5.93 trillion in FY22.


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