States' capex loans to be linked to renewable energy adoption, Pg13

Key Highlights:

• The government will link renewable energy adoption to interest-free capex loans provided to states.
• This policy tweak has been approved by the Ministry of Finance and Ministry of Power.
• The Union Budget 2026-27 allocated Rs 2 lakh crore as 50-year interest-free capex loans for states under SASCI.
• These loans are part of the Special Assistance to States for Capital Investment (SASCI) scheme.

Detailed Insights:

• The SASCI program includes untied funds (Rs 75,000 crore) and funds tied to state reform performance in sectors like power, mining, agriculture, and public finance.
• States can borrow beyond their 3% GSDP limit under the Fiscal Responsibility and Budget Management (FRBM) Act by utilizing SASCI loans.
• Encouraging renewable energy adoption through fiscal incentives aims to promote clean energy transition and reduce reliance on fossil fuels.
• This initiative aligns with India's commitment to achieving its Nationally Determined Contributions (NDCs) under the Paris Agreement.

Key Concepts Involved:

• Capex Loans: Funds provided for capital expenditure or long-term investments.
• Renewable Energy: Energy derived from natural processes that are replenished at a higher rate than they are consumed.
• Fiscal Incentives: Measures used to encourage specific economic activities.