© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
State governments have urged the Centre to relax the norms for the release of the Rs 1.3-trillion interest-free capex loans to them in FY24, stating that some of these are impractical and would impede the efforts to boost capital spending.
In a virtual meeting with senior finance ministry officials on Thursday, finance secretaries of several states have sought removal of the condition that the third installment of the united part of the loan will be disbursed only to those states that spend 45 per cent of “own capex budget” in the first half of the fiscal.
The untied component of the loan is Rs 1 trillion, and this will be released in three equal installments, according to a circular issued by the Centre earlier.
“As per the current norms, a state would not get the third installment of the untied loan if it does not achieve 45 per cent of the annual target by September. We want proportionate release of funds if a state falls short of its target marginally,” a state government official, who attended the meeting, told FE.
The practice of extending capex loans to states began in 2020-21.
As per the Centre’s norms, the first installment of 33.3 per cent (totalling Rs 33,300 crore for all states) of the untied loan would be released to each state government on meeting three fiduciary conditions: no rebranding of centrally sponsored schemes (CSS), sharing of scheme-wise spending data, and proof of deposit of the Centre’s share of the interest earned in Single Nodal Agency (SNA) account for each scheme.
To disincentivise delay in the release of CSS funds to SNAs, the Centre would deduct an amount equivalent to 15 per cent of the amount to be released as the second installment of untied funds (Rs 33,000 crore for all states) in case funds are not released by a state within a 30-day time limit prescribed by the Centre.
A state has to share treasury data every 21 days with the Centre’s Public Financial Management System in respect of all state schemes linked to CSS for which the state has received central funds.
The states said such reporting coverage should be 95% for funds released in the past 30 days instead of 21 days. The finance ministry has agreed to this suggestion, another official said. FE
