Centre’s Interest-Free Capex Loan Releases to States Cross ₹40,000 Crore in FY26

The Centre’s 50-year interest-free capital expenditure (capex) loans to states have already crossed ₹40,000 crore in FY26. So far, approvals worth ₹60,000 crore have been granted against the total target of ₹1.5 lakh crore for the year. Officials expect disbursements to touch ₹75,000 crore by September 2025.

Reforms Linked to Funding

Out of the ₹1.5 lakh crore capex loan target, the Centre has issued guidelines for ₹1.4 lakh crore. Nearly two-thirds of these loans are tied to governance and financial reforms, such as:

• Building dedicated municipal cadres
• Creating an integrated property tax portal
• Undertaking urban land and planning reforms
• Ensuring own capex growth and developing urban and rural infrastructure

Evolution of SASCI

The Scheme for Special Assistance to States for Capital Investment (SASCI) began in FY21 with ₹12,000 crore during the Covid-19 crisis. By FY25, it expanded to ₹1.5 lakh crore, with nearly half of the funds linked to reforms. Officials said states are now better equipped to utilise the scheme and meet the FY26 target.

Push for Digital Agriculture

For the first time, the Centre has allocated ₹6,000 crore to support digital agriculture initiatives. This includes:

• Developing and maintaining a farmers’ registry linked to land records
• Conducting a digital crop survey to standardise data and improve crop management

Boosting Financial Efficiency

Another ₹6,000 crore incentive has been earmarked to encourage states to adopt better financial practices. Key measures include:

• Onboarding 29 centrally sponsored schemes to the SNA SPARSH platform for real-time fund release
• Implementing Aadhaar-based Direct Benefit Transfer (DBT) payment systems in partnership with the RBI and NPCI

Also Read: Low Acceptance Rate in the Second Round of PM Internship Scheme Raises Concerns!

Conclusion

The Centre’s capex loan scheme has become a powerful tool to drive reforms, boost infrastructure, and promote digital transformation across states. With strong incentives for governance, agriculture, and financial efficiency, India is moving towards faster and more transparent growth.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. This does not constitute a personal recommendation/investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions.

Investments in securities market are subject to market risks, read all the related documents carefully before investing.