To comply with changed norms for getting interest-free capex loans from the Centre in 2025-26, states will seek modalities of uploading project details in the Public Financial Management System (PFMS) portal. Lack of knowledge in this regard is hindering states from providing the required information, which may lead to a delay in getting funds for projects, sources told FE.
In the first week of April, the Centre has issued guidelines for the disbursal of Rs 87,000 crore, or nearly 60% of the Rs 1.5 lakh crore interest-free 50-year capex loans, to the state governments and union territories for FY26. The amount would be transferred to states and UTs largely as untied and project-linked loans.
Unlike in the previous years, the Centre has made it clear that it will not accept manual submission of projects to be funded through these 50-year loans. States/UTs should submit the projects for Special Assistance (Loan) under the scheme through the online facility of the PFMS portal by the department of expenditure.
However, no modalities have been shared with states on how they will submit project details through the portal, creating difficulties in the submission of required details, a state government official said.
Given the likely delays in getting project approvals, some states have started spending on projects using own resources to ensure that fund utilisation under the scheme won’t suffer. When the projects are approved, they expect to receive the eligible amounts under the scheme.
Of the Rs 87,000 crore, Rs 55,000 crore is earmarked for states and Rs 2,000 crore has been allocated for the first time to UTs. The Rs 55,000 crore has been allocated among states in proportion to their share of central taxes & duties as per the award of the 15th Finance Commission.
The guidelines for the balance Rs 63,000 crore capex loans, which will be linked to reforms, are yet to be issued, sources said.
In order to avail benefits of any part of the scheme, in addition to the conditions prescribed under various parts of the scheme, a state government/ UT is required to meet the mandatory conditions. These are in full compliance with the official guidelines for the branding of centrally sponsored schemes (CSSs).
Of the Rs 1,49,484 crore capex loans released to the states in FY24, half of that was for reforms or project-linked as outlined in the scheme for special capital assistance for states for FY25.
The Centre has been implementing schemes for special assistance to states for capital expenditure since 2020-21 to support states as well as boost investment-led economic growth. The states submit ongoing as well as new projects for capex support from the Centre under the facility.
