Mumbai, Sep 30 (IANS): The Maharashtra Cabinet chaired by Chief Minister Eknath Shinde on Monday gave consent for interest-free secondary loan assistance to the Mumbai Metropolitan Region Development Authority (MMRDA) to expedite the Rs 9,158 crore three plus three lane Orange Gate to Marine Drive subway with two tunnels in south Mumbai.

Of the total cost of Rs 9,158 crore, the cabinet cleared the state government’s interest-free secondary loan of Rs 1,354.66 crore comprising of state government’s tax worth Rs 614 crore, 50 per cent of the Central taxes of Rs 307.22 crore and land acquisition cost of Rs 433 crore.

MMRDA’s contribution to the project will be of the order of Rs 477.34 crore. The MMRDA will implement the project on an 80:20 debt-equity ratio. The Cabinet has authorised the MMRDA to raise bilateral or multilateral loans or debt from other financial institutions of Rs 7,326 crore at a lower interest rate.

However, the Cabinet has made it clear that the state government will not bear any burden towards the payment of principal amount, interest and other fees.

In the case of cost escalation, the MMRDA will bear the additional burden and it will be allowed to make changes in the alignment of the project if needed. The cabinet also approved the formation of a special-purpose vehicle for the implementation of the project.

The land in the permanent possession of the state government, semi-government and local self-government will be transferred to Rs MMRDA at a nominal rate of Rs 1. However, if MMRDA needs additional land for residential and commercial development it will be handed over as per the prevailing market rates.

The Cabinet also cleared the Rs 18,838.40 crore 11.85 km Thane-Borivali double tunnel subway project despite the Finance Department citing constraints on raising debt in the wake of spiralling fiscal deficit.

Of the 49.48 hectares of land areas, nearly 37.63 hectares is government forest land and 11.91 hectares private forest land. As the tunnel of the proposed subway will pass through a protected forest area, the construction of the tunnel will be done by using tunnel boring machines complying with the conditions and approvals from the National Board of Wildlife.

The project is expected to reduce the time to cut the 23 km distance between Thane and Borivali which at present is covered in one and half hours. With the proposed two-tunnel subway, the distance will be reduced by 12 km and it will save commuting time by 40 minutes.

Of the Rs 18,838.40 crore, MMRDA’s contribution will be Rs 1,350.40 crore while the state government will contribute Rs 2,417 crore. The project will be implemented on an 80:20 debt-equity ratio. The cabinet gave its consent to MMRDA to raise a debt worth Rs 15,071 crore from bilateral, multilateral or other financial institutions at a lower interest rate with a rider that the state government will not bear any burden towards principal, interest and fee.

The Finance Department has underlined that the MMRDA will bear the additional burden in the wake of an increase in the project cost and thereafter due to the revised cost.

Further, the Finance Department has said that considering the financial burden of various budgetary announcements the state government’s contribution towards a secondary loan worth Rs 2,417 crore would be made available by the urban development department from savings from its allocated funds or MMRDA should raise it through toll or other sources.

The Finance Department also remarked that MMRDA should not depend on the repayment of loans to the state government but it should repay it from its own income sources.

MMRDA should do the phase-wise implementation of the project. This was needed as the state government has predicted a fiscal deficit of Rs 1,10,355 crore in the 2024-25 budget and it is expected to further increase to Rs 1,91,125 crore due to the supplementary demands.

The Finance Department has further noted that the government is entitled to raise debt within the limit of 3 per cent of the gross state domestic product.

However, in the wake of a predicted fiscal deficit of Rs 2,04,965 crore, the state government is expected to exceed the 3 per cent limit and therefore the government won't be in a position to raise additional loans during the current fiscal.