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Empowering States: Interest-Free Capital Boost



  Dec 05, 2023

Interest-Free Loans to States



Q: What are interest-free loans to states?

A: Interest-free loans to states are financial supports provided by the central government to state governments, which require repayment of the principal amount but incur no interest charges.

Q: Why does the central government offer these loans?

A: These loans are intended to boost capital expenditure in states, funding projects in vital sectors like health, education, infrastructure, water supply, and railways.

Q: How large are the interest-free loans currently?

A: The central government has allocated a corpus of Rs.1.30 lakh crore for interest-free loans to states.

Q: What is the expected extension of these loans?

A: The current scheme of interest-free loans might be extended to more than double the original amount, potentially over Rs.3 lakh crore.

Q: When did this scheme begin?

A: The scheme started as part of the Special Assistance to States for Capital Investment to propel economic growth and infrastructure development.

Q: What is the scheme’s impact on economic growth?

A: Public investments in infrastructure projects have significantly contributed to making India one of the fastest-growing major economies.

Q: What is the proportion of approved budgets utilized?

A: Over 60% of the approved corpus has already been disbursed for various projects across the states.

Q: How does the government intend to incentivize states?

A: The government plans to incentivize states by considering projects as grants if they are implemented within a set timeframe.

Q: When was the record growth of the Indian economy noted?

A: India’s GDP grew by 6.7% in the second quarter of the fiscal year 2023-24, marking a significant economic upturn.


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