The Centre will link a large chunk of 50-year interest-free loans to states with specific outcomes, in a bid to nudge them to make capital investments for infrastructure in a time-bound manner, a senior finance ministry official said.
Of the ₹1.3 trillion earmarked for the ‘special assistance to states for capital investment’ scheme in the interim budget 2024-25, about ₹75,000 crore, or 58%, will be linked to outcomes and reforms carried out by the states, Union finance secretary T.V. Somanathan said.
The remaining ₹55,000 crores will also come with a "simple condition", Somanathan said: "For availing the ₹55,000 crores interest-free loan, it (the infrastructure project) should be incremental; don’t use this to substitute your capital expenditure, make it over and above your last year’s overall capital expenditure."
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