Govt to give Rs 12,000 cr interest-free 50-year loan to states for capital projects

The loan will have to be spent entirely on new or ongoing capital projects, states can settle bills of contractors and suppliers but all the amount has to be paid before March 31, 2021.

New Delhi: Finance Minister Nirmala Sitharaman on Monday announced a Rs 12,000 crore interest-free 50-year loan to states for spending on capital projects in a bid to boost economy.

Addressing a press conference, she said, out of the Rs 12,000 crore, Rs 1,600 crore will be given to north-eastern states and Rs 900 crore will be for Uttrakhand and Himachal Pradesh.

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She said Rs 7,500 crore will be for the remaining states. Rs 2,000 crore will be given to states that fulfill pre-stated reforms.

The loan will have to be spent entirely on new or ongoing capital projects, she said adding that states can settle bills of contractors and suppliers but all the amount has to be paid before March 31, 2021.

The loan is over and above borrowing ceilings of the states and the repayment will be one bullet payment after 50 years, she added.

The Finance Minister also announced additional capital expenditure of Rs 25,000 crore by the central government.

This will be in addition to Rs 4.13 lakh crore budgeted, she said, adding that the additional money will be for spending on roads, defence infrastructure, water supply and urban development.