Centre Releases ₹50,571 Crore to States for Capital Expenditure: UP, MP, and Bihar Top Beneficiaries

The Union government has disbursed ₹50,571.42 crore to 23 states under its ‘special assistance for capital investment’ scheme during April to November 2024, as per the Ministry of Finance. This interest-free loan facility aims to accelerate capital expenditure during FY25, fostering infrastructure development and economic growth.

Responding to a query by MP Dilip Saikia in the Lok Sabha, Pankaj Chaudhuri, Minister of State for Finance, noted that Arunachal Pradesh, Haryana, Kerala, Punjab, and Telangana did not avail of the scheme during this period.

Top Beneficiaries of the Scheme

Among the recipient states, the highest allocations were made to:

• Uttar Pradesh: ₹7,007.93 crore
• Bihar: ₹5,408.88 crore
• Madhya Pradesh: ₹5,074.94 crore
• Rajasthan: ₹4,552.01 crore
• West Bengal: ₹4,416.23 crore
• Assam: ₹3,181.97 crore

Other significant recipients included Odisha, Maharashtra, Andhra Pradesh, and Karnataka, receiving ₹3,085.44 crore, ₹2,617.70 crore, ₹2,616.27 crore, and ₹2,272.87 crore, respectively.

Capital Investment Scheme Evolution

Launched in FY21 with an allocation of ₹12,000 crore to help states cope with the economic impacts of the pandemic, the scheme has seen significant scaling up:

• FY22: ₹15,000 crore
• FY23: ₹1.07 trillion, with ₹27,000 crore tied to state reforms
• FY24: ₹1.3 trillion, including ₹30,000 crore outcome-based allocations

For FY25, the government earmarked ₹1.5 trillion, up from ₹1.3 trillion in the interim budget, with ₹88,000 crore linked to reforms.

Reform-Linked Allocations

To access portions of the interest-free loans, states were required to meet specific reform benchmarks, such as:

• Housing sector improvements
• Scrapping old government vehicles and ambulances
• Urban planning and financial reforms
• Establishing digital libraries at the panchayat and ward levels
• Housing projects for police personnel

The remaining funds were allocated for capital projects slated for completion within the fiscal year, ensuring effective utilization and timely execution.

Impact of the Scheme

The scheme’s substantial allocations underscore the Centre's focus on boosting state-level infrastructure projects and economic recovery. During FY24, states availed ₹109,554.32 crore under the scheme, compared to ₹81,195.35 crore in FY23.

Since its inception, the initiative has provided ₹11,830.29 crore in FY21 and ₹14,185.78 crore in FY22. These allocations have played a pivotal role in supplementing state capital expenditures, enabling large-scale infrastructure development across sectors.

Outlook for FY25

With ₹50,571.42 crore already disbursed in the first eight months of FY25, the government is on track to meet its ambitious ₹1.5 trillion target. The scheme is expected to continue driving critical reforms and infrastructure growth at the state level, fostering long-term economic resilience.

Disclaimer: The data provided is based on official finance ministry reports. Readers are advised to refer to the latest updates for accuracy.