Maharashtras ruling party politicians today promised several reforms measures to World Bank officials in return for cheap funding for developmental projects in the state. But they stopped short of giving assurances that the state would end subsidies.
Minister for higher and technical education Dilip Valse Patil assured a World Bank team here on Thursday: "If you give us money today, by 10 am tomorrow you will hear of the unbundling of MSEB."
Maharashtra finance minister Jayant Patil added: "We are not opposed to unbundling per se. We are not yet sure about the model to adopt. The World Bank should give us low-interest funds as well as advise on how to unbundle."
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Speaker of the state legislature Arun Gujarathi, however, flatly told the World Bank team: "Subsidies will not stop. There has to be a human face to reforms or it will be of little consequence. Also, the funds given to the cooperative sector is a sensitive issue and we cannot just throw the poor to the winds."
The World Bank team presentation earlier in the day had highlighted various short term and long term steps the state would have to undertake for its fiscal position to improve.
The presentation said that a short term imperative is for the state to reduce its off-budget borrowings (for which the interest and principal are paid by the states budget) over time and such a strategy should be included in the states medium term fiscal reforms programme (MTFRP).
The presentation added that the initiative should be complemented by a strategy for providing government guarantees to public sector undertakings that would pay interest and principal from their own earnings, and a cap on the issuance of these guarantees.