MUMBAI: The Maha Vikas Aghadi government not only has debt burden set to hit a staggering Rs 5.2 lakh crore, but it also faces massive liabilities in the form of guarantees worth Rs 46,891 crore granted to loans taken by state-run entities. That’s a rise of 542% in four years. The figures were revealed in deputy chief minister Ajit Pawar ’s budget speech on March 6.

State guarantees are contingent liabilities and pose a burden to the state if they are invoked. “Guarantees have to be considered seriously when you look at the state’s liabilities. If the entity that has taken the loan cannot repay it, then the state has to step forward,” said former finance secretary Subodh Kumar (retd).

By 2016-17, the state had guaranteed loans worth Rs 7,305 crore. The guarantee bill has risen by Rs 39,586 crore since then. The largest share of guarantees or 36% of the total has gone towards the Mumbai-Nagpur Expressway.

The bulk of the guarantees granted in the last four years by the former BJP-led government were mainly for infrastructure projects. These include Mumbai Metro-4, Mumbai Transharbour Link project and Maharashtra Samriddhi Mahamarg, also known as the Mumbai-Nagpur Expressway. The former government guaranteed loans worth Rs 17,000 crore for the Mumbai-Nagpur Expressway in 2019, despite strong objections from the state finance department which said it would burden the cash-strapped state.

Budget documents show that in 2018-19, the urban development department had guaranteed loans worth Rs 19,131 crore, mainly for Metro-4 and Mumbai Transharbour Link projects; the cooperatives department had guaranteed loans worth Rs 3,941 crore; and the social justice department had guaranteed loans worth Rs 546 crore. The public works department had guaranteed loans amounting to Rs 804 crore.

In 2019-20, the state government granted guarantees to the Mumbai-Nagpur Expressway, which is extimated to cost Rs 55,335 crore. The 701km eight-lane expressway, which will cut travel time between the two cities from 14-15 hours to nearly eight hours, is expected to be completed in 2020-21. It also guaranteed loans worth Rs 1,800 crore to the Cotton Corporation of India .

Budget documents also show that the Maharashtra State Cooperative Bank had invoked guarantees on loans worth Rs 2,322 crore given to cooperative sugar and spinning mills. Of this, Rs 1,049 crore was found to be payable by a claims committee. From the sum, the government paid Rs 74 crore in 2018 and Rs 100 crore in 2019.

