Mumbai, April 8 (IANS) Amid rising fund requirement due to the constraints in revenue mobilisation internally, the Maharashtra Finance Department on Tuesday released the notification with regard to the guidelines for externally supported loans to finance various projects in the state.
The Finance Department has clearly said the concerned department will take adequate care to ensure that while raising the externally supported loans, the revenue and fiscal deficits will remain within the stipulated limits prescribed in the Fiscal Responsibility and Budget Management (FRBM) Act,2003.
“External assistance loans are part of the Net Borrowing Ceiling approved by the Central government. Therefore, while raising external assistance loans, these loans should be within the limits of the second financial year as per the FRBM Act and should be within the Net Borrowing Ceiling approved by the Central Government. Be careful to stay within the ceiling limits,” said the government notification.
The state government is required to limit the fiscal deficit to 3 per cent of the GSDP as per the FRBM Act. The budget for year 2025-26 has managed to keep the fiscal deficit at 2.7 per cent, which had gone to 2.9 per cent in the previous fiscal. The guidelines have specified that these loans should not be treated as a source to fulfill financial needs.
As per the guidelines, “The said loan will have to be used only for execution of the works and procurement of goods and services required for the specific project as provided in the Project Agreement.”
“Since the state government is responsible for the implementation of the project as per the project specifications, such as the implementation charges and foreign exchange risk for the external assistance loans provided to the state governments, the concerned administrative department will take care of the efficiency of the project as per the project specifications,” said the notification.
External assistance is mainly provided through multilateral agencies, bilateral agencies, international financial institutions like IBRD, IDA, IFAD, ADB, NDB, KfW, JICA, and through the Central government.
The guidelines have also mandated the administrative department to seek a loan to create a Preliminary Project Report (PPR) with the help of Maharashtra Institution for Transformation (MITRA).
MITRA was established in November 2022 to achieve rapid and comprehensive development of the state on the lines of NITI Aayog’s policy through the participation of the private sector and non-government organisations, taking into account the needs of the state. The concerned department will have to seek the approval of the chief minister for going in for externally supported loans based on PPR.
With approval from the Chief Minister, it will be uploaded on the Department of Economic Affairs (DEA). After the ‘approved’ remark from the Planning Department, it will be presented to the concerned ministries in the Centre and Niti Aayog. Once approved by the screening committee of the DEA, a detailed project report (DPR) will be presented at the earliest.
“The Detailed Project should adequately reflect the Strategic elements of techno economic (economic viability, social cost benefit, value addition etc.) ecological (land use, ecological sustainability etc.), socio-cultural (target population and gender matters, participation, social impact, etc.), and institutional (institutional and organisational analysis, capacity building, training etc.) dimensions in the project design in measurable terms. An objective-oriented project design in a matrix format along with work plan, cost and time schedule indicating target/output, cash flow statement, etc. should also be a part of DPR,” said the guidelines.
(Sanjay Jog can be contacted at sanjay.j@ians.in)
–IANS
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