World Bank set to back state loans for Mumbai upgradation projects

Move will see State's rating jump to AAA+

Maharashtra's plan to transform Mumbai city into a global business destination got a big boost with World Bank (WB) willing to finance Mumbai-specific projects through a $1 billion loan assistance. What's more, the Bank is also willing to provide a counter guarantee to back the state's market borrowing programme for these projects.

This WB move is expected to upgrade the state's credit rating and bring down its cost of borrowings. The state will raise over Rs 6,000 crore from the market to finance the developmental projects.

A senior government official told Business Standard: "We had extensive talks last night with Union minister of state in the PMO, Prithviraj Chauhan, on the proposed recast plan for financing various Mumbai-specific initiatives. We were told by Ashish Singh, secretary to Chauhan, that the proposal to the World Bank, forwarded by Maharashtra to the Centre, would be despatched in a couple of days."

"This will mean that Maharashtra, which has seen it's credit rating downgraded repeatedly in the past by rating agencies, would find its rating on a par with top corporate houses at AAA+ as its borrowings would be backed by the World Bank. We hope to negotiate low interest loans from financial institutions on the basis of the WB backing," the official said adding that private investment would also become readily available with the WB backing.

According to the informal discussions with the WB, the state government was told that after the Union government forwards its proposal to the WB, the Bank would set up a group of five of its officials, who along with five business leaders and state bureaucrats from Maharashtra, would then prepare a business plan for the projects in Mumbai and Navi Mumbai within 100 days.

The meeting between chief minister Vilasrao Deshmukh and Chauhan on Sunday evening focused upon the Dharavi slum redevelopment project towards which the state has to contribute Rs 500 crore, the international cargo and passenger hub and international airport at Navi Mumbai, the sea link from Worli to Nariman Point, beautification of the Chatrapati Shivaji Terminus (CST) as well as the carving out of three more station platforms at the Carnac Bunder railway stations besides the development plan for the Bombay Port Trust (BPT).

Discussions also centred around transforming Mumbai city into an international financial centre with Chauhan noting that there was a need for the Reserve Bank of India (RBI), which has expressed its reservations, to change its mindset on the issue.