Under pressure to disburse the promised financial assistance to mega and large industries in an election year, the State government has requested the cash-rich Maharashtra Industrial Development Corporation (MIDC) to come to its rescue.
As much as ₹1,300 crore is pending release from the government as part of the Package Scheme of Incentives (PSI) and Industrial Promotion Subsidy (IPS) announced in 2014 to promote industrial development in backward regions.
Dwindling State finances
However, a subsequent cash crunch and dwindling State finances owing to “market forces such as changes in the dollar and crude oil prices” had made the government ignore the commitment, senior officials said.
Additional Chief Secretary (Finance), U.P.S. Madan said, “It is true that we have faced a problem in releasing this amount for many months. We have tried resolving this, but are now asking the MIDC to fulfil this commitment. If they can begin giving the amount out on instalments, we could pool in at a later stage.” The industries have been threatening State-wide protests if the money is not released before the year-end, when the schemes lapse. The repeated failure to pay off the amount has put Chief Minister Devendra Fadnavis in a bind since he has been leading the State government’s efforts in the Ease of Business initiatives.
Senior officials said the MIDC is likely to pay off at least ₹800 crore, and the government will pitch in with resources when its financial condition improves. “We admit to the hitch in releasing the amount and the Chief Minister himself has taken note of this on several occasions,” said Mr. Madan.
To encourage the dispersal of industries to the less-developed areas, the Maharashtra government has been implementing the PSI and IPS for expansion of units in remote regions. The five-year tenure of the two schemes ends in 2018.
Under the scheme, eligible units in the private sector, public sector, joint sector, co-operative sector and mega projects of the Central government were considered for incentives. The government claimed to have disbursed ₹1,933 crore in December 2016 under the PSI. Overall, under both the schemes, it claimed that a disbursal of ₹2,500 crore was made in 2014-15, and ₹2,835 in 2015-16. So far, the amount pending is a backlog over the years, officials said.
