Why in news
- Department of Expenditure urged State governments to accelerate the utilization of interest-free capex loans following slow fund absorption.
Key terms
Capital Expenditure (Capex)
Government spending directed toward creating long-term physical or financial assets.
50-Year Interest-Free Loan
Long-term fiscal assistance extended by the Centre to States without interest burden.
Department of Expenditure
Nodal department in the Ministry of Finance overseeing financial management and central releases to States.
Multiplier Effect
Proportional increase in final national income resulting from an initial injection of spending.
What is the Scheme?
- Centrally funded facility offering 50-year interest-free loans to State governments to boost public capital expenditure.
- Administered by the Department of Expenditure, Ministry of Finance, to accelerate infrastructure, asset creation, and regional growth.
Current Status and Implementation Challenges
- Central allocation released approximately ₹51,000 crore by October 1 under the scheme.
- States have utilized only about one-fourth of allocated funds, prompting central intervention to resolve project execution delays.
Why it matters
- Capital expenditure generates high economic multiplier effects, crowding in private investment and enhancing long-term infrastructure capability.
Prelims facts
- Special Assistance for Capital Investment provides 50-year interest-free loans to States.
Mains discussion
- Role of central fiscal support in driving state-level public capital formation and addressing absorptive capacity bottlenecks.
Source: Economic Times Industry
Same topic · past papers
UPSC has asked this before
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