Spurned by the cash-rich Maharashtra Industrial Development Corporation (MIDC), the State government has no option but to raise ₹1,000 crore through bonds to pay off dues to industries.
Nearly five years after it unveiled the Make in Maharashtra initiative to promote industries, the government is struggling to disburse the promised financial assistance to mega and large units. This because the MIDC has turned down the government’s request to pay part of the subsidies under the Package Scheme of Incentives (PSI) and Industrial Promotion Subsidy (IPS) announced in 2014 to promote industrial development in backward regions.
Senior officials said MIDC has argued in a recent letter that it has been financing part development of several big-ticket projects, such as the Mumbai-Nagpur Super Expressway and Metro works in Mumbai and Nagpur. The corporation has said its profits are reserved to build a land bank for struggling industries, and it cannot come to the government’s rescue now. “In such a scenario, we have no option but to issue bonds and raise a capital of about ₹1,000 crore. The government is unable to disburse money owing to a budget crunch,” said a senior official of the Industries Department.
The Finance Department confirmed that the pending amount to the industries has already been provisioned for in the next budget. “We have provisioned about ₹1,000 crore on account of our resources and another ₹1,000 crore in the name of MIDC,” said UPS Madan, Additional Chief Secretary, Finance.
As much as ₹1,300 crore is pending release from the government as part of the PSI and IPS this year alone. However, a cash crunch and dwindling finances owing to “market forces such as changes in the dollar and crude oil prices” have made the government ignore the commitment over the past two years, senior officials said.
To encourage the dispersal of industries to less-developed areas, the State has been implementing the PSI and IPS for expansion of units in remote regions. The five-year tenure of the two schemes ended 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.
