New Delhi, June 25 -- Seeking better outcomes from its effort to boost growth through public spending, the Centre's Department of Expenditure has asked states and Union Territories (UTs) to limit their proposals under its Rs.2 trillion, 50-year interest-free loan scheme for capital expenditure (capex) to their choice of maximum five priority sectors in FY27, two people involved in the process told Mint. This revamped Special Assistance to States for Capital Investment (SASCI) scheme marks a shift from simply encouraging higher capex to ensuring more concentrated investments that deliver measurable development outcomes.

The aim is to nudge states to make focussed spending and avoid spreading resources thin across a large number of project...