The Maharashtra government has started the process of identifying land parcels that will be housed in MAHAINFRA, a special purpose vehicle (SPV), Sudhir Mungantiwar, state finance minister, said. The land, lying idle with various state departments, will subsequently be securitised to raise resources for big-ticket infrastructure projects. MAHAINFRA is expected to be registered as a company in the next couple of months, Mungantiwar said.
The government is also exploring the possibility of converting MAHAINFRA into a non-banking financial company (NBFC) on the lines of Gujarat State Financial Services. The state is looking to spend an estimated `1 lakh crore on infra projects in the next five years. The Maharashtra budget for 2017-18 had proposed institutionalising an infrastructure fund via an SPV. The SPV will aggregate land, unlikely to be used in the near future.
Mungantiwar had said last month that the securitisation of the land will aid in raising funds through low-cost loans or bonds or investments from large investors with long-term horizons like national or international pension and insurance funds.
A recent Credit Suisse report observed the Maharashtra government was struggling to spend. In the last two years, Maharashtra has spent as much as 11% lower than in revised estimates, with slippage spread across categories, the report said.
“Growth in FY18 expenditure is budgeted to slow to 6%. Own revenue growth is to pick up from 10% year-on-year in FY17 to 13%, but central transfers are to slow, and the fiscal deficit ratio is to fall from 2% in FY17 (ex-UDAY) to 1.5%,” it noted.
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The report noted that the state is focusing on the growth of infrastructure, and is is tapping extra-budgetary resources for infrastructure development, like the the proposal to set up MAHAINFRA. “Even otherwise, Rs 3,500 crore in the budget is to drive Rs 30,000 crore under HAM (hybrid-annuity model) for 10,000 kilometre of state highways. Similarly, the above Rs 1 trillion planned for various metro projects has a large extra-budgetary component, for e.g., Mumbai Line 3 (Rs 23,100 crore) is to get 57% from JICA”.