Incentives for States: ₹3,000 Crore SASCI Fund Prioritizes Fiscal Discipline
Fiscally disciplined states to get priority access to ₹3,000 crore SASCI incentive pool
The Economic Times
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The Indian government will allocate ₹3,000 crore under the Special Assistance for State Capital Investment (SASCI) scheme to states demonstrating fiscal discipline. States will be assessed on debt management, borrowing discipline, and transparency, with performance-based incentives aimed at improving fiscal governance and attracting investment.
- 01States showing fiscal discipline will have priority access to a ₹3,000 crore incentive pool.
- 02Debt management will account for 50% of the assessment criteria, followed by borrowing discipline at 30% and transparency at 20%.
- 03States must adopt benchmark strategies for government securities and prepare a medium-term debt strategy by December 2026.
- 04Larger states can receive up to ₹250 crore, while mid-sized states can access up to ₹200 crore.
- 05The initiative aims to enhance fiscal governance and improve debt sustainability across states.
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The Indian government has introduced a performance-based framework under the Special Assistance for State Capital Investment (SASCI) scheme, allocating ₹3,000 crore to incentivize states that demonstrate fiscal discipline. States will be evaluated based on three criteria: debt management (50% weightage), borrowing discipline (30%), and transparency (20%). This initiative encourages states to manage their debt prudently and disclose off-budget liabilities. To qualify for full marks in debt management, states must manage at least 5% of their short-term maturing debt through buybacks or switches. Additionally, states must adhere to a quarterly borrowing calendar with a maximum deviation of 10% and ensure that fourth-quarter borrowing does not exceed 30% of total annual issuance. The guidelines categorize states based on size, allowing larger states to access up to ₹250 crore, while mid-sized states can receive up to ₹200 crore. This initiative aims to bolster fiscal governance and attract investment by improving debt sustainability.
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This initiative encourages states to improve their fiscal governance, which can lead to more sustainable financial practices and potentially lower borrowing costs for state projects.
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