Is obtaining a loan with interest from a bank, along with a non-refundable government grant, and then repaying less than the borrowed amount, considered usury (riba)?

It is not permissible to enter into a bank loan that involves interest (riba), even if the state will pay a portion of it as a grant. The determining factor is the agreement with the bank for an interest-based loan. Riba is one of the gravest prohibitions, except in cases of dire necessity where there is a real fear of harm to one's life, limb, honor, intellect, or wealth.