States to get Rs 12K Cr interest-free 50-year loans for CapEx

At a time when states are finding it hard to make ends meet amid the pandemic and the Centres inability to pay GST Compensation Cess, Finance Minister Nirmala Sitharaman on Monday announced special interest-free 50-year loans worth Rs 12,000 crore for capital expenditure.

Out of the total amount, Rs 1,600 crore would be aimed towards the Northeastern states, and Rs 900 crore loan would be provided to Uttarakhand and Himachal.

Balance loans worth Rs 7,500 crore for other states will be given, in proportion to share in Finance Commission devolution, which would include 50 per cent initial disbursement and the balance would be disbursed the use of first instalment. The unutilised funds will be reallocated.

Further, Rs 2,000 crore IOC this loan to states would be allocated to them only who meet at least three out of four reforms announced earlier under the Atmanirbhar Bharat Package.

The loans provided would be used for new or ongoing capital projects needing funds and settling the bills of contractors and suppliers on such projects.

The borrowed amount would have to be spent by March 31, 2021.

The Finance Minister said that this funding will be over and above all other additional borrowing ceilings given to states.

Under the scheme, bullet repayment will have to be made after 50 years and no servicing is required till then.