To promote economic activities, the central government will provide an interest-free loan of Rs 12,000 crore to the states. The loan will be of 50 years duration and will be given to spend on capital projects. Finance Minister Nirmala Sitharaman announced the scheme on Monday.

Which state will get the loan?
He said that out of the amount of Rs 12,000 crore, Rs 1,600 crore will be given to the northeastern states and Rs 900 crore to Uttarakhand and Himachal Pradesh. He informed that an amount of Rs 7,500 crore will be given to the remaining states. At the same time, Rs 2,000 crore will be given to those states which have completed the reforms mentioned earlier.

Giving information about the scheme, Sitharaman said that the entire amount can be spent on new or existing capital projects. Sitharaman said that states can also settle bills for contractors and suppliers from this, but the entire amount will have to be paid before 31 March 2021.

Additional capital expenditure also announced
He said that this loan will be different from the borrowing limit of the states. After 50 years, the states will have to pay it at one go. The finance minister also announced an additional capital expenditure of Rs 25,000 crore by the central government. He said that this additional amount would be spent on roads, defense infrastructure, water supply, and urban development. This will be in addition to the fixed budget of Rs 4.13 lakh crore.