Due to inflation, CM’s pet project to cost more

Cabinet approves that it will pay interest on loan for three years

The project cost of NagpurMumbai Samruddhi Corridor, an ambitious pet project of Chief Minister Devendra Fadnavis has escalated to Rs 49,247 crore form earlier Rs 46,000 crore. Government attributes it to inflation.

The government has awarded a big package to the Project Affected People (PAPs) to acquire their agricultural land, the expected expenses on land acquisition has reduced to Rs 7500 crore from earlier Rs 13,000 crore, however the interest on loans and inflation during the last two years has escalated the entire project cost by more than Rs 3,000 crore.

The state cabinet on Tuesday approved the proposal of payment of Rs 6,388 crore interest for the loan which is to be borrowed from financial institutions to construct the Super Communication way for a period of three years.

According to the proposal submitted to the state government by Maharashtra State Road Development Corporation (MSRDC) on August 24, 2016 the estimated cost of the project was Rs 46,000 crores in which Rs 13,000 crore was estimated for land acquisition. Cost on construction of road was estimated to Rs 24,000 crore whereas Rs 6000 crore was estimated to pay interest on loans.

A government source disclosed, in the last two years, due to inflation, the cost of project has amounted to Rs 49,247 crore. The actual work will require Rs 29029 crore, costing higher by Rs 5,029 crore and estimated amount of tax to be paid has escalated to Rs 6388 crore, a hike of Rs 388 crore.

The government plans to borrow Rs 28,000 crore instead of Rs 24,000 crore loan from banks and financial institutions. On the other hand MSRDC will have equity share of Rs 27,335 crore. MSRDC will raise loan of Rs 5000 crore from various government run corporations. the state will pay Rs 6396 crore as interest to MSRDC against the loan borrowed from institutions.

"We will pay interest for three years as this project is important for our state. After three years, when MSRDC will start charging toll from vehicles, they will pay back this amount to the state government," said Sudhir Mungantiwar, minister for finance and planning.

There will be 25 toll plazas and fare will be collected for the period of 40 years.