India states pressed to use ₹67,000 crore capex loans

The Department of Expenditure flagged the slowdown in letters sent in the first week of October, officials said, noting that several states had yet to draw available funds or submit utilization certificates under the Scheme for Special Assistance to States for Capital Investment, or SASCI. The Centre had released about ₹51,000 crore as of Oct. 1 and sanctioned loans worth ₹67,000 crore, against a ₹2 lakh crore allocation for the year. That means just 26% of the annual outlay has been released so far, even as actual usage trails further behind.

The timing is important. Officials said the pace slowed after July, raising concern that a late-year rush may not fully compensate for earlier delays. The government is confident states can absorb the full allocation in the second half of the fiscal year, but it is now stepping in to identify projects, clear bottlenecks and speed approvals so the money turns into spending on the ground.

For investors, that makes the SASCI program a direct read-through on India’s infrastructure complex. The beneficiaries are the obvious ones — construction firms, cement and aggregates producers, equipment makers and project financiers — but the bigger trade is in the multiplier effect. When states spend on capital works, they support demand across freight, power equipment, engineering services and industrial supply chains. When they don’t, the market loses a key source of domestic demand just as global conditions remain uncertain.

The scheme itself was designed as a 50-year, interest-free financing tool to push state infrastructure investment, making it one of the Centre’s most powerful policy levers for sustaining growth. In a year when the budget is described by officials as generous, the real constraint is execution. That is where the opportunity — and the risk — lies.

The market underestimates how much India’s growth story now depends on turning sanctioned capital into actual concrete, steel and equipment orders. If the government’s push succeeds, second-half utilization could revive momentum for infrastructure names and broader India exposure. If it doesn’t, the shortfall will be felt well beyond state budgets. Investors should watch utilization data closely; in India’s capex cycle, execution is the catalyst.