Budget 2024: States seek special financial aid, easier norms for raising capital

New Delhi, DHNS: Several states, including Kerala, Andhra Pradesh, and Chhattisgarh, urged the central government on Saturday to provide special financial assistance to complete development projects in their respective states and also sought improvements in the 50-year interest-free loan scheme to boost capital expenditure (capex).

Finance ministers of states and Union Territories made the demands during a pre-budget consultation meeting chaired by Union Finance Minister Nirmala Sitharaman in the national capital.

Speaking at the meeting, Kerala Finance Minister K N Balagopal said the “state government is going through a very serious liquidity crunch.” He demanded a special package of at least Rs 24,000 crore in the Union budget 2024-25 for Kerala to “tide over the current liquidity stress”.

Chhattisgarh Finance Minister O P Choudhary pitched for special assistance to the state for the development of the state capital region Nava Raipur. Choudhary urged the union finance minister to maintain allocation under the ‘Special Assistance Scheme for Capital Investment to States' at Rs 1 lakh crore for the current financial year.

In her remarks, Nirmala underlined the central government's support to states through "timely tax devolution, Finance Commission grants, and arrears of Goods and Services Tax (GST) compensation being provided for providing stimulus to growth," said a statement by the union finance ministry.  

Regarding the ‘Scheme for Special Assistance to States for Capital Investment’, Nirmala mentioned that while most of the loans are untied, a part of them is conditionally linked to citizen-centric reforms by states and sector-specific capital projects, and she requested the states to avail these loans by fulfilling the requisite criteria.

Under the ‘Special Assistance to States for Capital Investment’ scheme, special assistance is being provided to the state governments in the form of a 50-year interest-free loan.

Apart from finance ministers from several states, the meeting was attended by the chief ministers of Goa, Meghalaya, Mizoram, Nagaland, and Sikkim, along with the deputy chief ministers of Bihar, Madhya Pradesh, Odisha, Rajasthan and Telangana. These chief ministers and deputy chief ministers hold the charge of finance portfolios in their respective states.