MKVDC to get Rs 80 crore dues from Maharashtra

The contractors of the ambitious Rs 34,000 crore Maharashtra Krishna Valley Development Corporation (MKVDC) on Thursday got the state finance department to commit to a pre-Diwali disbursement of Rs 80 crore in dues that have become payable to them.

A contingent of contractors to the various components of the project met finance department officials seeking a commitment that the payments would be made to them prior to Diwali.

Already a amount of over Rs 300 crore is outstanding towards contractors' payments over the last two years.

A proposal for making the disbursement of Rs 80 crore was discussed and cleared by the finance department on Thursday. The entire MKVDC project, launched during the 1995-1999 tenure of the Shiv Sena-Bharatiya Janata Party regime in the state was originally estimated to cost around Rs 15,000 crore.

However, delays in project completion over the last decade, has resulted in its cost escalating to Rs 34,000 crore. During the SS-BJP regime, around Rs 7,000 crore was raised to finance this project through market borrowings (mostly at high rates of interest).

Subsequently, the Congress-Nationalist Congress Party led Democratic Front government also raised around Rs 6,000 crore during the last five years towards meeting the expenditure of the project.

The project is discredited with having contributed to the state's ballooning debt burden, as the short-term high interest borrowings by the SS-BJP led to principal and interest payments becoming due to financial institutions well before the project execution has reached a completion phase (and can start exhibiting returns on the investment it needed).

The state government foresees no imminent defaults towards repayments to institutional financiers to the project.

"It is true that with our revenue deficit standing at Rs 14,000 crore, we have been compelled to utilise funds from our capital surplus account to finance the deficit. The state government has also embarked upon an additional revenue mobilisation exercise aimed at easing the financial constraints of the state exchequer," a senior government official said.

Earlier proposals, left pending formal clearance, such as auctioning of liquor shops, cessation of sales tax concessions, permitting private mini-buses to operate in the state, reducing annual borrowings, introducing the Fiscal Responsibility Act, the lapsed Guarantee Act and a newly formulated medium term fiscal responsibility programme are currently pending before the chief secretary of the state for approval.

However, financing the pre-poll sops announced by the Sushilkumar Shinde-led DF government would put a further strain on the finances of the state.

"As of now we do not foresee any problems in meeting our debt obligations (interest and principal payments). We can service these loans as well as pay salaries and pensions expenses. Any further cost upon the state exchequer, however, would lead to a cash crunch situation," the official said.