State capex hits 2.7% of GDP under SASCI scheme: Report

New Delhi: The Special Assistance to States for Capital Investment (SASCI) scheme lifted state capital expenditure to 2.7% of gross domestic product (GDP) in 2024-25 from 2.2% of GDP in 2021-22, but the gains are being diluted by widening divergence in state-level utilisation since 2022-23, said the State Bank of India Ecowrap report.

The state-level utilisation of central capital expenditure loans has become increasingly uneven among states, with Madhya Pradesh (94.3%), Maharashtra (95.0%) and Rajasthan (93.4%) ranking among the strongest utilisers, while Kerala (69.7%) and Telangana (57.5%) lag behind, the report said, citing 2024-25 data.

"Overall, SASCI has clearly helped states in their quest for increased capital expenditure. Its time now that the states also chip in decisively to realize the full impact," the report said.


It attributed the divergence to binding fiscal constraints and structural differences across states.

Higher debt-to-gross state domestic produce (GSDP) ratios are associated with weaker absorption, as rising revenue expenditure crowds out capital spending, according to the report

"Ageing states tend to have lesser SASCI utilisation as compared to both intermediate and Youthful states. Intermediate and Youthful states have the same level of SASCI utilisation," the report said.