Maharashtra irrigation projects in a lurch

Maharashtra finance ministry officials are sceptical on the plans to raise Rs 16,000 crore from the open market through bonds for completing state's irrigation projects. They fear the state may fall into a debt trap again.

During the budget session of the state assembly, members from Vidarbha, Marathwada and northern Maharashtra had flayed the government policy on irrigation projects.

They were critical of huge chunk of funds allocated for western Maharashtra projects by irrigation minister and Nationalist Congress Party (NCP) member Ajit Pawar.

Western Maharashtra is considered to be a bastion of the NCP. Ruling Congress members had joined hands with the Opposition to corner the government over the issue. This put Chief Minister Vilasrao Deshmukh in a piquant situation.

Later, they along with Opposition members had stalled the proceedings of the House over the issue.

This forced Speaker Babasaheb Kupekar to intervene and an all-party meeting was called to pacify the agitating members.

At the meeting it was decided that the state would borrow money from the market if required and would complete the irrigation projects in the backward regions within five years.

According to the masterplan prepared by the water resource ministry, nearly Rs 30,000 crore would be required to complete the irrigation projects in the state.

The irrigation department expects it will get Rs 14,000 crore over next five years as budget allocation and plans to raise the rest from the market. However, the state cabinet is divided over mobilising the money from the market.

Though the item was listed on the cabinet's agenda, it has not yet got the green signal from the state cabinet.

When contacted a senior finance ministry official said, "The state's debt is likely to reach Rs 1.35 lakh crore by the end of this financial year. Already, the state has kept apart Rs 13,000 crore for debt servicing. And If we go in for fresh loans at 10 per cent interest we will have to make an additional provision of Rs 1,600 crore for debt servicing. Then Maharashtra from the position of a revenue surplus state will become a revenue deficit state, hitting other social welfare schemes and infrastructure project hard."

He went on to say that due to high interest bonds floated during the BJP-Sena government rule for irrigation projects in the Krishna valley and after implementing the Fifth Pay Commission's recommendations, the state's fiscal deficit reached 5 per cent of state's total gross domestic product in 2001-02.

But austerity measures adopted by the state yielded positive results and the percentage was brought down to 3.7 per cent in 2004-05.

Furthermore, it is expected that the percentage will come down to 1.8 per cent in the current financial year.

State finance ministry officials do agree that there is agrarian crisis in the state and to tide over this, they are planning consultations with the Centre and the Planning Commission.