Big Budget Push for Infrastructure: ₹1.5 Lakh Crore in Interest-Free Loans to States

Big Budget Push for Infrastructure: ₹1.5 Lakh Crore in Interest-Free Loans to States (2024)

New Delhi, July 23, 2024 - In a significant move to boost infrastructure development across the states, Union Finance Minister Nirmala Sitharaman announced ₹1.5 lakh crore worth of interest-free loans on a long-term basis in the Union Budget 2024-25. This initiative aims to support states in developing critical infrastructure over the next five years.

Key Announcements

1. Interest-Free Loans for States: The central government will provide ₹1.5 lakh crore in interest-free loans to states. This substantial financial support is intended to facilitate the development of infrastructure, ensuring that states can undertake and complete essential projects without the burden of interest payments.

2. Private Sector Involvement: To further enhance infrastructure development, the government plans to facilitate private sector investment through viability gap funding. This approach aims to attract private capital into infrastructure projects, leveraging public funds to cover gaps in project financing.

3. Road Connectivity Projects: An allocation of ₹26,000 crore has been earmarked for road connectivity projects. These projects are crucial for improving transportation networks, reducing travel time, and enhancing economic activities across various regions.

4. Industrial Node at Gaya: An industrial node will be developed at Gaya as part of the Amritsar-Kolkata Industrial Corridor. This development is expected to boost industrial growth and create job opportunities in the region.

5. Capital Expenditure: The capital expenditure for the fiscal year has been pegged at ₹11,11,111 crore, representing 3.4% of the GDP. This significant allocation underscores the government's commitment to enhancing the country's infrastructure.

6. PM Gram Sadak Yojana Phase IV: The fourth phase of the PM Gram Sadak Yojana will be launched in 25 rural areas, focusing on improving rural road connectivity. This initiative aims to enhance access to markets, healthcare, and education for rural communities.

7. Flood Management Assistance for Assam: Recognizing the challenges posed by floods in Assam, the budget includes provisions for flood management and related projects to mitigate the impact of flooding and improve resilience in the state.

Implications for States

The interest-free loans provided by the central government will enable states to undertake large-scale infrastructure projects without financial strain. Improved infrastructure is expected to boost economic growth, create jobs, and enhance the quality of life for citizens. Additionally, the focus on road connectivity and industrial development will facilitate smoother transportation and stimulate industrial activities.

Conclusion

The 2024 Union Budget's allocation of ₹1.5 lakh crore in interest-free loans for infrastructure development demonstrates the government's commitment to building a robust infrastructure framework across the country. By supporting states with significant financial resources and encouraging private sector participation, the government aims to drive economic growth, create employment opportunities, and improve overall infrastructure in India.