The Union Government has sanctioned a massive ₹3.6 lakh crore to states in the form of interest-free loans with a 50-year repayment period. The funding comes under the Scheme for Special Assistance to States for Capital Investment (SASCI) and is aimed at strengthening state-level infrastructure and boosting growth.
Finance Minister Nirmala Sitharaman highlighted that the unique structure of these loans gives states the freedom to invest in roads, schools, healthcare, housing, and other public assets without the immediate burden of interest payments.
How It Benefits States and Citizens
Since the repayment period stretches over five decades, states can focus on long-term capital projects rather than short-term liabilities. For ordinary citizens, this translates into better connectivity, improved public services, and new job opportunities created through large-scale infrastructure spending.
Already, 22 states have reported double-digit growth in their capital expenditure, showing early signs that these funds are being put to use effectively.
Financial Details Behind the Move
The Union Budget for FY26 had proposed a ₹1.5 lakh crore outlay for interest-free loans to states, with a mix of tied and untied allocations. But with fresh approvals, the figure has now expanded to ₹3.6 lakh crore, giving states a deeper cushion for development projects.
The loans are also linked to performance and reforms. Some portions are earmarked for projects such as green energy, digital infrastructure, and urban transformation. States that meet reform targets will enjoy quicker access to funds.
Implications for Personal Finance and Citizens
For the average taxpayer and household, such capital investments can have ripple effects:
- Boost to local economies: Infrastructure spending generates jobs, stimulates demand for materials, and supports small businesses.
- Better quality of life: New schools, hospitals, and roads improve everyday living conditions.
- Property and asset value growth: Improved infrastructure often pushes up real estate and land values.
- Fiscal responsibility factor: Since loans are interest-free, there is less chance of states raising taxes in the short term to fund development.
Still, citizens must remain watchful. If states fail to use funds efficiently, the long repayment horizon could saddle future generations with debt obligations without sufficient returns.
Looking Ahead
The ₹3.6 lakh crore package is one of the largest state-support initiatives in recent years. It shows the Centre’s commitment to shared growth by giving states more fiscal room. For individuals, the impact will be visible in the form of better infrastructure, faster services, and stronger local economies – but the real test will be how states manage these funds in practice.
