Nirmala Sitharaman Urges States to Fully Tap ₹1.5 Lakh Crore Special Fund, Flags Underutilisation

Finance Minister Nirmala Sitharaman has called on states to fully leverage the Centre’s Special Assistance to States for Capital Expenditure (SASCE) scheme to boost economic growth. She emphasised that investments under the scheme should focus on employment-generating infrastructure and projects that promote local development.

This is a 50-year, interest-free capital expenditure (capex) loan designed by the Centre to boost state-led infrastructure development, launched in FY21 to spur post-COVID economic growth. Renamed as SASCI, it initially started with ₹12,000 crore and has now been significantly boosted to ₹1.5 lakh crore annually for FY 2024–25 and FY 2025–26. Of the ₹1.5 lakh crore earmarked for FY26, around 60% will be unconditional or linked to infrastructure spending, while the remaining 40% will be tied to reforms that states. Union Territories are also included under the scheme in FY26.

"When you build capital assets, employment increases, core sectors benefit, and the multiplier effect is a lot more than just putting money in people’s hands,” Sitharaman said at a public event in Shillong, Mint reported.

States at the Heart of Recovery

Highlighting the importance of decentralised development, the Finance Minister noted that India’s economic recovery is closely linked to the recovery of individual states.

“These funds come without interest, and repayment is due only after five decades, and even that may be waived. The focus is on creating long-term public assets, not short-term handouts,” she stated.

The Finance Commission of India recommend the central government on how it should distribute revenues to the states and UTs.

Key Projects and Recognition for Meghalaya

Sitharaman highlighted that Meghalaya's exemplary utilisation of its entire allocation of ₹5,400 crore under the SASCI, sets an example for other states to follow.

"While some states are unable to fully utilise their shares, Meghalaya has effectively used its entire allocation to build capital assets. I will put on record my appreciation of Meghalaya’s efforts," she added.

During her address, Sitharaman spotlighted several key projects being implemented under the SASCI scheme and the PM-DevINE initiative. Among the highlighted developments were the Umiam Lake redevelopment, new MICE (Meetings, Incentives, Conferences and Exhibitions) infrastructure and a football stadium at Mawkhanu, working women’s hostels and the establishment of 75 digital libraries.

She also mentioned the new campus for the Indian Institute of Corporate Affairs (IICA) which will be set up in Meghalaya—marking the institute’s first campus outside Delhi.