Centre likely to miss ₹1.5 trillion capex loan target for states in FY25

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Subscribe to enjoy similar stories. The Centre is likely to fall short of fully utilizing the budgeted allocation for states under the ‘Special Assistance for Capital Investment’ scheme in 2024-25, as state spending took a hit during the general elections and a slowdown in economic growth, particularly in the first two quarters, two people aware of the matter told Mint.

The actual disbursement could even remain below ₹1 trillion, less than the 2023-24 outgo of ₹1.09 trillion and ₹1.5 trillion budgeted for the interest-free capital expenditure loan scheme in this year's budget, the people said on the condition of anonymity. During the first eight months of the fiscal, the Centre has released only ₹50,571.42 crore to states.

"While the capital expenditure at the state level is expected to be ramped up during the third and fourth quarters (FY25), the entire allocation is unlikely to be utilized," the first person said, adding that the utilization of funds in 2024-25 is likely to be below last fiscal's ₹1.09 trillion, due to slower spending during the first two quarters. Also read | Centre releases ₹50,571 cr to states as capex loans during Apr-Nov: MoS finance A spokesperson of the ministry of finance didn't respond to emailed queries.

India’s public capex has largely been subdued in H1FY25, with the central and aggregate state capex contracting by 15.4% and 10.5% on-year, respectively, during the period, said a recent CareEdge Ratings report. The Centre has achieved 37% of its budgeted capex target in H1FY25, while 20 major states at an aggregate level have completed only 28% of their budgeted target, the rating agency added.