According to sources, there would be no more extensions for states to employ capex loans. States are unlikely to be granted an extension to the deadline for utilizing 45 percent of their annual capex loan by October, according to central government officials.

Some states have reportedly asked for a two-month extension from the Union Finance Ministry's expenditure department, citing a backlog of work caused by assembly elections. The expenditure department, on the other hand, is concerned that such an extension will cause a disruption.

The center had already granted the states an extension to use a portion of the first installment by October, which was initially scheduled to be completed by September 2023.

The government had sanctioned Rs 1.1 lakh crore as of November 7, with Rs 67,000 crore being released in the first payment. The release of the second and final payment of Rs 33,000 crore is conditional on states meeting 45% of their annual expenditure target (excluding federal loans) by October and presenting utilization certificates for 75% of the money from the first tranche.

"More than 16 states have availed this scheme, and approximately five may apply for the second installment by December," stated a government official. The funds were declared as part of the Rs 10 lakh crore capital spending plan in the Union Budget 2023.

These funds are part of the 'Special Assistance to States for Capital Investment 2023-24' project, which aims to increase capital expenditure by state governments while also acknowledging the potential for a multiplier effect on the economy State governments receive interest-free loans for a period of 50 years under this program, totaling Rs 1.3 lakh crore for fiscal year 2023-24.