Centre's Rs 12,000 crore interest free 50-year loans to states: Which state will get what?

Finance Minister Nirmala Sitharaman on Monday announced special interest-free 50-year loans to states for capital expenditure for Rs 12,000 crore. The loan worth Rs 200 crore each is for 8 North East states, Rs 450 crore each for Uttarakhand, Himachal and Rs 7,500 crore for 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," says FM Sitharaman while addressing a press conference on economic issues.

"Of this special interest free loan, first part is of Rs 2,500 crore for North East (Rs 1,600 crore), Uttarakhand and Himachal Pradesh (Rs 900 crore). The second part is of Rs 7,500 crore for other states, in proportion to share in Finance Commission devolution," said FM.\

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The third part of the loan is of Rs 2,000 crore for states which meet at least 3 out of 4 reforms given in Atma Nirbhar fiscal deficit package, she added.

Both Part 1 and Part 2 of interest-free loans given to states are to be spent by March 31, 2021

50% will be given initially, remaining upon utilization of first 50%

- FM @nsitharaman https://t.co/OUIBamTtsH

- PIB in Maharashtra (@PIBMumbai) October 12, 2020

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.  

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Among others, Nirmala Sitharaman 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.  

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