Disintermediation by Government of India from lending under State Plans

Consequent to the recommendations by Twelfth Finance Commission, Government of India is not lending to the States under the State Plans from this financial year. Thus only grants portion of the assistance as per above pattern is being released to the States. Each State is to raise market borrowing for the loan portion of the State Plan Schemes subject to its borrowing caps for the year.

However, under the Externally Aided Projects, existing arrangements regarding release of external assistance to States for on- going State sector projects signed on or before March 31, 2005 will continue, i.e. it would be provided in the form of Additional Central Assistance (ACA) in the loan/grant ratio of 10:90 for Special Category States, and 70:30 for Non Special Category States.