SASCI Fund Utilisation Turns Uneven Across States as Allocations Rise: SBI

The Scheme for Special Assistance to States for Capital Investment (SASCI), introduced in October 2020, has seen changes in how funds are used across states.  

A report by State Bank of India (SBI) shows that utilisation, which was largely uniform in the early phase, has become uneven as allocations increased. The programme was rolled out to support state capital spending during the pandemic through 50-year interest-free loans. 

Around ₹4.5 trillion has been disbursed over 5 years. This has coincided with a rise in states’ capital expenditure from 2.2% of GDP in FY22 to 2.7% in FY25. 

Drop in Full Utilisation Levels 

Data shows a decline in the number of states fully utilising funds. In FY21, 17 out of 28 states recorded 100% utilisation. By FY25, no state reached that level. 

Among states, West Bengal reported utilisation of 96.7%, followed by Maharashtra at 95% and Chhattisgarh at 94.4%. Lower utilisation was seen in Manipur at 47.4% and Nagaland at 51.7%. 

Fiscal Position and Variation 

States with higher debt levels and revenue deficits have generally reported lower utilisation. In such cases, a larger share of spending goes towards revenue expenditure, limiting capital outlay. Punjab, Kerala, and Telangana have shown weaker absorption in recent years. 

In comparison, Madhya Pradesh, Rajasthan, Maharashtra, and Andhra Pradesh have maintained relatively higher utilisation. Differences are also visible across demographics, with ageing states averaging 74.5% utilisation, compared with 80.6% for intermediate and 82.9% for younger states. 

Role of Fund Structure 

The design of the scheme has influenced outcomes. For every ₹1 increase in SASCI funds, total capital expenditure rises by ₹0.67, while states’ own capital spending declines by about ₹0.34. 

Tied funds, linked to sectors such as urban planning and agriculture, show a stronger link to capital expenditure. A ₹1 increase in tied funds corresponds to a ₹0.87 rise in total spending, compared with ₹0.26 for untied funds. 

Allocation for FY27 

The scheme has been extended for 2026-27 with an outlay of ₹2 trillion. Of this, ₹750 billion has been set aside as untied support, with the rest linked to reforms and infrastructure sectors. 

Read More: India’s Textile Exports Rise 2.1% in FY26 on Steady Global Demand! 

Conclusion 

While SASCI has supported higher capital spending, utilisation varies across states, showing differences in fiscal position and execution capacity. 

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