State public works minister Nitin Gadkari told The Financial Express that the cost of market borrowing for his department or the state-owned Mahharashtra State Road Development Corporation (MSRDC) will come down substantially if the government grants the tax concession. The coupon on the bonds can be pared as the investors will not be required to pay tax on their interest income in these bonds, the minister said.

The corporation, which has so far raised about Rs 1,200 crore through bond issue, plans to approach market soon. Simultaneously, the department has also called upon the Centre to accord the priority sector status for road and bridge projects and direct banks to reserve 3per cent of their incremental deposits for this purpose. Such a provision for housing projects has been announced by finance minister Yashwant Sinha at this year's budget, the minister said.

Gadkari said that once the concessions are granted loans should be made available at 11.5-12 per cent and this would encourage the private sector involvement in a big way in these projects. The minister said he would make a fresh appeal to the visiting prime minister AB Vajpayee on Wednesday. The department had earlier made representations to finance minister Singh and chairman of the Central Board for Direct Taxes in this regard.

Gadkari said that the corporation plans to construct a expressway between Mumbai and Nagpur with an investment of Rs 2,100 crore. Once the expresss way is ready, the distance will be covered within just eight hours.

The project will comprise Mumbai-Nashik expressway (costing Rs 900 crore), Aurangabad-Vaijapur-Sinnar-Ghoti expressway (Rs 600 crore) and Aurangabad-Nagpur expressway (Rs 600crore).

"A proposal to offer sales tax concessions to investors on cement, steel and bitumen and exemption in royalty and turnover tax will be put before cabinet soon," he said.

According to Gadkari, Rs 30 crore would be required to conduct techno-economic feasibility study of Mumbai-Aurangabad expressway. The state industry department, Marathwada Statutory Development Board and Western Maharashtra Statutory Development Board have agreed to contribute necessary funds for this purpose, he said.

Meanwhile, the state government has invited tenders for the Mumbai-Nashik expressway and the work will begin on this project from June this year. u