FY23 capex loans to states 7% more than RE – The Financial Express

The Financial Express
With a late pickup in utilisation by states, the Centre’s disbursement of capex loans to them has exceeded the revised estimate (RE) by 7% to touch Rs 81,200 crore in FY23, a senior official told FE.
In the FY23RE, the Centre reduced the outlay for interest-free 50-year loans by 24% from the budget estimate (BE) of Rs 1 trillion due to a delay in compliance of many states with conditionalities and failure to submit utilisation certificates (UCs) of the initial installment.
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“The disbursement exceeded the revised estimate as many states were able to file utilisation certificates in time for the second installment. As project approvals were already to the tune of Rs 87,000 crore, the disbursement was smooth,” the official said.
Most of the disbursements were for untied projects. From the Rs 6,000 crore earmarked for the purpose, approximately Rs 5,000 crore was released to states as a conditional component of the capex loans. The outlay of Rs 3,000 crore for capital projects for optical fibre cable networks was fully utilised by states while Rs 2,000 crore, was earmarked for the implementation of digitization in key service delivery programmes.
Following the finance ministry’s directive to states to comply with the “no-rebranding rule” by November 30 for centrally sponsored schemes to avail of the funds, all states have fallen in line.
Most of the approvals and disbursements are for ongoing projects, clearing pending capex bills and some new projects.
In the first 10 months of the current fiscal year, states continued to make modest capital investments.
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The combined capex of 20 states (excluding central capex loans), representing nearly 90% of the GDP, whose finances were reviewed by FE, contracted by around 4% in the first ten months of FY23 to around Rs 3 trillion, compared with over 41% growth in the year-ago period.
To ensure that states do not reduce their capital expenditure, the Centre has linked the release of Rs 33,300 crore, or one-third of the Rs 1 trillion untied capex loans to states’ incremental capital expenditure in FY24. While the Centre would release these funds provisionally if states met 45% of their annual capex target in H1FY24, they would be fully recovered in FY25 if they did not meet the investment target by March 2024.
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