Last year, when this special capex outlay was scaled up by more than six times to `1 trillion, the release of funds started as late as October, owing to the fiduciary conditions and time taken by states to comply with them.

The outlay for the current year is `1.3 trillion, with an untied component of `1 trillion.

In the last financial year, the conditions that states should not contradict any of the central government scheme’s brand names and provide scheme-wise fund utilisation data by integrating their treasuries with the Public Financial Management System (PFMS) hampered the pace of the funds release and actual use.

So, in the revised estimate for FY23, the Centre reduced the outlay by 24% to `76,000 crore for the year. The actual disbursement was `81,2000 crore, 7% higher than FY23RE as many states managed to give utilisation certificates of the first instalment just in time.

“This problem will not be there in the current financial year because all states are now on board, and are in compliance with the fiduciary condition,” a senior official told FE. “That’s why we are starting sanctions from April itself as states have now a pipeline of projects ready.”

However, there are some concerns with regard to states’ ability to accelerate capex from their own resources (other than central assistance) as a third of `1 trillion ‘untied’ capex support in the current fiscal hinges on achieving their individual capex targets for the year. The ‘tied’ `30,000-crore capex support, out of the total of `1.3 trillion, is linked to various conditionalities and reforms in FY24.

The untied funds would be released to states in three equal instalments, subject to conditions. Accordingly, the states in aggregate would have to invest `6.12 trillion in FY24, excluding capex support given by the Centre and their debt repayments.