UP promises to cost R5,535 crore

Written by Deepa Jainani | Lucknow | Updated: Sep 29 2012, 09:48am hrs
The Samajwadi Party government in Uttar Pradesh is poised to swallow a bitter Rs 5,535-crore pill in order to keep its 6-year old promise of offering a slew of sweeteners to all those who invested more than Rs 100 crore in the state. A committee of three ministers, which has been formed by chief minister Akhilesh Yadav to deliberate on the fate of the 10 units that had qualified for the subsidies, would be meeting the heads of all these units on October 1 to decide whether the sweeteners should be granted, amended or withdrawn.

The promise, made in 2006 by the then chief minister Mulayam Singh Yadav, was an effort to stop the flight of industry from UP to the newly formed neighbouring state of Uttarakhand, which had been bestowed with a special industrial package by the Centre at that time. It included an interest-free loan equivalent to sales tax amount for a period of 15 years, 20% capital subsidy, 10% infrastructural subsidy and transport subsidy.

According to sources in the industry department, an exercise has been undertaken to work out the estimated amount that these subsidies would cost to the state government and the amount comes to Rs 5,535 crore.