Centre to give Rs 12,000 crore interest-free 50-year loan to states: Which state will get how much

Addressing media before crucial GST meet, Sithraman said, “Capital expenditure i.e. money spent on infrastructure and asset creation will have multiplier effect on the economy. It will not just pep up the economy but will also improved future GDP.”

Written by October 12, 2020 15:35
Sitharaman -

New Delhi: Finance Minister Nirmala Sitharaman has announced a special interest-free 50-year loan to the states by Central govt for Rs 12,000 crore capital expenditure.

Addressing media before crucial GST meet, Sithraman said, “Capital expenditure i.e. money spent on infrastructure and asset creation will have multiplier effect on the economy. It will not just pep up the economy but will also improved future GDP.”

Out of 12,000 crore capital expenditure, loan worth Rs 200 crore is earmarked for 8 North East states, Rs 450 crore each for Uttarakhand, Himachal while Rs 7,500 crore will be given to remaining states, as per 15th Finance Commission devolution.

“We are issuing a special interest-free 50-year loan to states for Rs 12,000 crore capital expenditure. It will be issued in three parts. In Part 1, Rs 200 crore each for eight North-East states and Rs 450 crore each for Uttarakhand, Himachal. In Part 2, Rs 7,500 crore for remaining states, as per 15th finance commission devolution.

In Part 3, Rs 2,000 crore for the state which meets at least 3 out of 4 reforms given in Aatma Nirbhar fiscal deficit package,” she added.


“Both Part 1 and Part 2 of interest-free loans given to states are meant to be spent by March 31, 2021, in which 50 per cent will be given initially, remaining upon utilisation of first 50 per cent,” Finance Minister said.

Finance Minister’s measures to reignite growth comes at a time when the country’s GDP has contracted 23.9% in 1st quarter.

The Finance Minister also announced that an additional budget of Rs 25,000 crore will be provided for roads, defence, infrastructure, water supply, urban development and domestically produced capital equipment.

Sitharaman -

“We estimate that the measures announced today, for boosting consumer spending and capital expenditure, will boost demand by Rs 73,000 crore, to be spent by March 31, 2021. Given that private sector spending through LTC tax benefit would be at least Rs 28,000 crore, we estimate the total demand boost due to today’s measures to be more than Rs 1 lakh crore,” she said.

Finance Minister will chair 43rd Goods and Services Tax (GST) Council meeting through video conferencing later in the day.