SMC set to be debt-free by '05

Surat Municipal Corporation (SMC) is likely to create history in a few months when it becomes perhaps the first local self governed body in the country to become debt free.

The Standing Committee has decided to repay all loans by the end of 2005, its chairman Shankar Chevli and Mayor Snehlataben Chauhan said after the body's meeting on Thursday.

The Surat Municipal Corporation owes around Rs 119 crore to various agencies. Of these, Rs 92.79 crore are major loans.

These include Rs 4.32 crore owed to the government, Rs 8.75 crore to the World Bank, Rs 1.36 crore to Hudco, Rs 26 crore to Bank of Baroda, Rs 10.40 crore to State Bank of Saurashtra, Rs 17.18 crore to Indian Overseas Bank and Rs 23.54 crore to ICICI Bank.

These figures include interest on various loans till June 30, 2004. As per information received, Rs 72 crore had been allotted in the revised budget of 2003-04 towards repayment of these loans by SMC.

But on account of time shortage, the loans could not be repaid and the allotment was carried forward into the budget for 2004-2005.

On the other hand, since the time of the revised budget for 2003-04, the debt figure which was Rs 69 crore has increased by around Rs 23 crore to around Rs 92 crore. This is basically on account of the interest accrued.

It is learnt that most of the loans mentioned above have a long time before their repayment date. If the Surat Municipal Corporation waits till the due date, it will have to pay another Rs 29.40 crore in interest. Hence the standing committee decided to prepay all the major debts.

SMC has a balance of Rs 298 crore in its treasury at present, which would make repayment of the loans quite easy.

According to the standing committee decision, the Rs 92.79 crore major loans will be repaid in this fiscal. After these loans have been repaid, there will remain another Rs 27 crore in minor loans.

It is expected that these loans too will be repaid before the end of 2005, thereby making SMC totally a debt free corporation.

At the same time, Surat Municipal Corporation will not be applying for any new loans or debts unless and until it becomes extremely necessary.