Maharashtra Budget hailed

Maharashtra Finance Minister Jayant Patil has announced the annual Budget of Maharashtra for fiscal 2005-2006, which seeks to draw upon the expertise of mutual funds, banking, and finance institutions to hold the political establishment to fulfilling its budgetary promises.

Such has been the impact of the budget that even the Union planning commission has sought a presentation of the budget from state department officials on the grounds that it may hold out as a model for other states.

Confirming this a senior secretariat source said that Patil did not only present a surplus budget of Rs 265 crore for the first time in 13 years, but also restructured the financing pattern for the state in such a manner so as to ensure its moves towards fiscal prudence.

"Patil has simply rearranged the financing pattern by allocating crucial tasks such as debt management, distressed assets management and state issued guarantee management to private institutional financing bodies.

"The setting up a trust will begin with a corpus of Rs 3,000 crore and will be handled by financial experts of high standing under the state finance department who will have control over the corpus," the source said.

For instance it is sought to segregate the trust's functioning into three areas - debt management, distressed assets management and state issued guarantee management.

A senior finance professional like a former deputy governor of the Reserve Bank of India may be invited to head the state's debt management.

Similarly, private fund managers and banking institutions may be given the task of handling the issue of distressed assets of the state, that include several co-operative institutions (in the sugar and textile sector) which have defaulted on institutional loans which were then honoured by the state government.

"Logically, the assets of these institutions should now accrue to the state government. This task will be better performed by a banking institution that heads this segment of the trust," the source revealed in the wake of the fact that political personalities in many instances hold the reins of control of these institutions making it difficult of the government of the day to effect the co-operative's assets are transferred to the state.

Similarly, the state issued guarantees for projects would, henceforth, be at the discretion of a institutional fund manager.

"The idea behind this proposal is to ensure that merely politically backed projects do not pass the muster for state backing while raising finance from institutional fund managers.

The fund manager heading this segment of the trust may simply insist that the state deposit the entire corpus of the backing it is issuing for a project be deposited with it as in its opinion it is not a feasible project.

"This way repeated invoking of state government backing would cease to be a damaging proposition," the source said.