Maharashtra plans Rs 5400 cr market borrowings

The Maharashtra government has finalised a plan to raise Rs 5,400 crore through open market borrowing by March 31 to finance irrigation, road, drinking water and police housing projects.

This is partly meant to clear bills in excess of Rs 1,800 crore submitted by various state department that are pending before the state treasury.

However, according to well placed sources, the Union finance ministry has sought feasibility reports for individual projects that are to be financed through this borrowing plan. No state government can go for market borrowings till it has secured the prior sanction of the Union finance ministry.

The Rs 5,400 crore borrowing plan is expected to be cut by the Union government, it is reliably learnt. The Centre has asked the state to file individual feasibility reports for each project that is sought to be financed.

A large chunk of the bonds issue is expected to finance the pending irrigation projects (including several undertaken by the Maharashtra Krishna Valley Irrigation Development Corporation "" MKVIDC).

Similarly, several road projects undertaken by the Maharashtra State Road Development Corporation and drinking water projects are sought to be financed through the market borrowings.

The beleaguered MKVIDC has been responsible for the recent downgrading of the Maharashtra government by rating agencies such as Crisil after it defaulted on interest and principal payments to banks and financial institutions.

This apart, the corporation has also been blamed for funding cost inflated irrigation projects, especially in the western Maharashtra region.

While nearly 95 per cent of the proposed market borrowings are being sought for financing irrigation, road and water supply projects, some funds are also being sought for police housing projects.