Budget 2023: Fifty-year interest-free loans to States extended for another year

New Delhi [India], February 1 (ANI): Finance minister Nirmala Sitharaman, in her Budget for 2023-24 on Wednesday, announced that the government proposes to continue 50-year interest-free loans to state governments for one more year.

“I have decided to continue the 50-year interest-free loan to state governments for one more year to spur investment in infrastructure and to incentivize them for complementary policy actions, with a significantly enhanced outlay of Rs 1.3 lakh crore,” Sitharaman said. Sitharaman said that the entire 50-year loan to states has to be spent on capital expenditure front within 2023-24.

Most of this will be at the discretion of states, but a part will be conditional on states increasing their actual capital expenditure. She said, parts of the outlay will also be linked to, or allocated for, the following purposes like scrapping old government vehicles, urban planning reforms and actions, financing reforms in urban local bodies to make them creditworthy for municipal bonds, housing for police personnel above or as part of police stations, constructing Unity Malls, libraries and digital infrastructure for children and adolescents and State share of capital expenditure of central schemes.

Meanwhile, overall capital expenditure outlay is being increased steeply for the third year in a row by 33 per cent to Rs 10 lakh crore in 2023-24, which would be 3.3 per cent of GDP. “This will be almost three times the outlay in 2019-20,” Sitharaman said.

Presenting the Union Budget, Union Finance Minister Nirmala Sitharaman on Wednesday pegged the fiscal deficit target for 2023-24 at 5.9 per cent of gross domestic product (GDP). In 2022-23, the government pegged fiscal deficit at 6.4 per cent.
The Finance Minister further said that the government intends to bring the fiscal deficit below 4.5 per cent of GDP by the financial year 2025-26.

The Economic Survey, tabled in the Parliament on Tuesday, noted India’s GDP is expected to grow in the range of 6 to 6.8 per cent in the coming financial year 2023-24. This is in comparison to the estimated 7 per cent this fiscal and 8.7 per cent in 2021-22.