Implement reforms, get interest-free loans: Center to states

States becoming willing partners of the central government for the swift rollout of new-age reforms will be able to obtain a chunk of the long-term interest-free loans of ₹1.5 lakh crore in this financial year to bolster their capital spending, FM Nirmala Sitharaman announced in her budget speech.

"For promoting competitive federalism and incentivising states for faster implementation of reforms, I propose to earmark a significant part of the 50-year interest-free loan," she said. The outlay for states under the Special Assistance to States for Capital Expenditure scheme has been raised by ₹20,000 crore from the interim budget level of ₹1.3 lakh crore. Under this scheme, the Centre extends 50-year loans to states at zero interest to boost their durable assets creation. States are required to undertake stipulated reform measures to obtain a part of the capex loans that are conditional in nature. Sitharaman stressed that effective implementation of several of these reforms, especially in land, labour and capital, requires collaboration between the Centre and the states and building consensus, "as development of the country lies in development of the states".

The minister also encouraged states that charge high stamp duty to moderate the rates, and also consider further reduction in duties on properties purchased by women. "This reform will be made an essential component of urban development schemes," she said.The FM said that land-related reforms in both rural and urban areas that warrant the active role of states will cover land administration, planning and management, and urban planning, usage and building bylaws.