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Maharashtra seeks Centre's help to face funds crunch

By Mahesh Vijapurkar

MUMBAI DEC. 23. Maharashtra has asked the Centre to recognise that it has the "most serious financial problems'' and that interest and principal payouts on old debts are "eating significantly into our funds with very little left to spend on development needs.''

Hitherto, the State Government had only expressed fears that its capacity to fund the social sector was getting terribly constrained and the threat of severe gaps in the sector was looming. Now, "there is little to spend'' on them.

The banks and financial institutions, therefore, should be asked by the Centre to "reschedule its debt by giving moratorium on principal payments and to renew the old high cost debt with new low cost debt.''

The high cost borrowings to fund long-gestation irrigation projects are also required to be rolled over.

The State's debt stock has been described as having become "so high'' by Chief Minister, Vilasrao Deshmukh, pitching for support from the Centre, including a plea for sending Maharashtra's application to the World Bank for a Special Structural Adjustment Loan.

Speaking at the National Development Council meeting recently, Mr. Deshmukh said Maharashtra's "track record'' would ensure that the funds would not be diverted. Earlier, Mr. Deshmukh had expressed fears that the funds crunch threatened diminishing investment in critical social sectors.

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