Editor’s Note:
The Special Assistance to States for Capital Investment (SASCI) is a Government of India scheme that provides states and regions with 50-year, interest-free loans for capital expenditure. The assistance is extended over and above normal borrowing limits and is linked to specific reform conditions. While the scheme does not involve market borrowing or the mortgaging of public assets, concerns raised in the Assembly reflect a broader debate on long-term debt sustainability and fiscal autonomy.
Jammu, Feb 10 — The Jammu and Kashmir Legislative Assembly witnessed chaotic scenes on Monday as a discussion on the Special Assistance to States for Capital Investment (SASCI) scheme spiralled into sharp political confrontation, with PDP MLA Waheed Para alleging that the initiative could push J&K into a long-term “debt trap.”
The remarks triggered strong objections from National Conference legislators during the ongoing Budget debate, forcing repeated interventions from the Chair and briefly halting proceedings. While the government defended the scheme as a low-cost financing tool meant to boost infrastructure and economic growth, the opposition warned of mounting debt and reduced fiscal autonomy.
“The chief minister and NC MLAs are boasting about bringing SASCI to J&K,” Para told the House. “This is not a welfare scheme but a debt trap through which you are mortgaging J&K to industrialists.”
He further alleged that the borrowing pattern set a dangerous precedent. “You are taking loans from the market. This amounts to destruction,” Para said, questioning the sustainability of such financing.
Referring to last year’s Budget of Rs 1.40 lakh crore, Para said nearly Rs 40,000 crore was allocated towards revenue expenditure, while capital expenditure stood at around Rs 7,600 crore. “With barely 30 days left in the financial year, is the government capable of spending nearly Rs 1 lakh crore in such a short time?” he asked.
The debate has brought renewed attention to SASCI, a Government of India scheme launched in 2020–21 to stimulate capital investment by states in the aftermath of the COVID-19 slowdown. Capital expenditure refers to government spending on long-term assets such as roads, bridges, power projects, schools and hospitals that are intended to generate lasting economic value.
J&K was brought under the ambit of SASCI during the current financial year. Under the scheme, GOI provides states and regions with interest-free loans for a tenure of 50 years, aimed exclusively at funding infrastructure and other capital projects. The borrowing is permitted over and above normal fiscal limits and is tied to the implementation of specific reforms in sectors such as urban governance, power distribution and land administration.
Crucially, SASCI differs from conventional borrowing. The funds are extended directly by GOI and do not involve raising money from banks or bond markets. Unlike market loans, which typically carry interest rates of 7 to 9 per cent, SASCI loans carry zero interest and are structured with long repayment horizons and extended moratoriums.
The scheme also does not provide for the mortgaging of public assets. There is no clause that allows the seizure of infrastructure such as roads, power projects or land in the event of repayment delays, nor does it enable the transfer of public assets to private entities.
Despite this, critics argue that the scheme still adds to the overall debt burden. Their concerns centre on the long repayment period, which binds future governments, the increasing reliance on GOI assistance, and the reform-linked conditions that may constrain policy choices in sensitive sectors. Economists note that while such borrowing is inexpensive, it remains a liability if capital projects fail to generate sufficient economic returns.
PDP president Mehbooba Mufti echoed these concerns in a post on X, backing Para’s intervention in the Assembly. “Waheed Para today exposed a deeply dangerous move by the J&K government taking money under SASCI in the name of ‘aid’ when in reality it is a 50-year market loan,” she said.
“If the government fails to repay, our public infrastructure will be mortgaged and handed over to private control. This is nothing short of putting J&K’s future on sale,” Mufti added, calling for an urgent and detailed debate in the Assembly.
Participation in SASCI, however, is voluntary, and the scheme has been widely adopted by states across India as a mainstream fiscal instrument to fund infrastructure at low cost. Supporters argue that its effectiveness ultimately depends on how much is borrowed, where the funds are deployed, and whether the projects undertaken lead to sustained economic growth.
As the political sparring continues, the debate over SASCI in J&K asks larger question: how to balance the need for infrastructure investment with long-term fiscal responsibility.