Hard pressed by the poor state of economy, the Lokshahi Aghadi government has also expressed its inability to offer any more incentives either to the existing or new investors untill a detailed review is complete. The newly appointed finance minister Jayant Patil has already directed the state finance and planning departments to submit reports on state economy.

Mantralaya sources told The Financial Express that a cabinet meeting held on Tuesday discussed a presentation on the state finances prepared by planning secretary Vinay Bansal. The cabinet was unanimous on improving state finances by adopting harsh measures.

The Sena-BJP government's sops to the Fiat for setting up its facility at Ranjangaon with an investment of Rs 1,000 crore was high on agenda. The project, which had been put on shelve by the company following slump in the automobile sector, had been granted sales tax exemption for 14 years without any financial ceiling. Electricity duty had also been exempted for seven years.

The German car major Volkswagen (Scoda) had been offered similar concessions at Shendre near Aurangabad. The company, which had earlier planned to invest Rs 1,100 crore, had decided to prune it to Rs 750 crore following market compulsions. The company had been offered land at the rate of Rs 50 per sq mt.

The Sena-BJP government had amended the Package Scheme of Incentives 1993 to enable such sops for mega projects in auto sector mainly in Mumbai Metropolitan Region and Pune Metropolitan Region which fall in A category.

The decision was taken early this year with a view to helping out the Fiat at Kurla in north east Mumbai, Telco-Indica in Pune and Nocil in Trans Thane Creek Area. According to these guidelines, a new project in auto sector or existing industrial units going in for expansion/diversification/modernisation with fixed capital investment of Rs 1,500 crore or above and set up in MMR or PMR would be defined as mega project. These prpjects would be eligible only for sales tax incentives with monetary ceiling to 10 per cent of the fixed capital investment for two years.

The previous government had also issued a resolution in August this year to encourage investment of Rs 500 crore in the backward Vidarbha and Marathwada regions. It also changed the limits of investment in Nashik, which falls in north Maharashtra, to encourage the proposed investment of Rs 800 crore by the Mahindras for its much ambitious IDAM project.