Finance Minister Nirmala Sitharaman said the government will give ₹12,000 crore to various states in the form of 50-year interest-free loans.
As per the announcement, ₹2,500 crore will go to North Eastern states (Rs 1,600 crore), Uttarakhand and Himachal Pradesh (Rs 900 crore), while ₹7,500 crore will go to other states according to the Finance Commission and the Centre's earlier criteria.
Moreover, of Rs 12,000 crore interest-free loans to states, Rs 2,000 crore will be given to those states which fulfill at least 3 out of 4 reforms spelled out in Aatma Nirbhar Bharat package.
The ₹12,000 crore of ‘special assistance for states’ has a provision of it to specifically be used for new or ongoing capital projects. The funds can be used to settle contractors, suppliers’ bills and other pending payments on such projects.
Speaking on the capital expenditure, Sitharaman said that the money spent on infrastructure and asset creation has a multiplier effect on the economy, as it not only improves current GDP but also future GDP. “We want to give a new thrust to capital expenditure of both states and Centre”, she added.
It may be mentioned that 50% of the amount to the states will be given initially and the remaining amount will be disbursed upon utilization of the first 50%.