Kolkata: State-owned Housing and Urban Development Corp. Ltd (Hudco) is likely to provide West Bengal loans worth Rs500 crore so that the state can meet increased project costs under a city modernization programme that is partly funded by the Union government.
The loans will carry an interest rate of 7.5-8%, said Hudco executive director D. Subrahmanyam. “We could reduce the interest rate to 7% because a lot of underprivileged people would benefit from the projects,” he added.
Under the Jawaharlal Nehru National Urban Renewal Mission, the Union government funds 35% of costs, but is unwilling to raise budgetary support for the delayed projects, which include building flyovers, water treatment plants and homes for the poor in Kolkata and its vicinity, according to Dipankar Mukhopadhyay, principal secretary in the state’s urban development department.
The Kolkata Metropolitan Development Authority, an arm of the state’s urban development department, has estimated the cost overrun at Rs500 crore. The delay was largely because of problems with land acquisition, Mukhopadhyay said.
The proposed Hudco interest rate is lower than the rate at which the state currently borrows from the market, said Mukhopadhyay, who was earlier the principal secretary in the finance department. West Bengal currently borrows at 9-10%. The Centre has stopped giving out sanctioned funds since the new government has been formed, alleged Asok Bhattacharya, West Bengal’s minister for urban development. “We will have to borrow from Hudco to save the projects. This is an additional burden, which we weren’t prepared for,” he said.
West Bengal recently faced criticism from Saugata Ray, a Trinamool Congress leader and junior minister for urban development at the Centre, for delays in implementation of projects under the urban renewal scheme.
Hudco’s loans to various civic bodies, to be repaid in 15-20 years, will be guaranteed by the state government, Mukhopadhyay said.
The cost escalation in the urban development department’s projects is estimated to be Rs400 crore. The Kolkata Municipal Corporation, which is revamping the city’s underground sewage with city modernization funds, estimates that the cost of this ?has gone up by Rs100 crore.
The government is facing difficulty in implementing projects in districts such as North 24 Parganas, South 24 Parganas and Howrah, where the Trinamool Congress, West Bengal’s main opposition party, has strengthened its hold since local body elections last year, an official of the urban development department said on condition of anonymity.
Work on several flyovers in Kolkata has been delayed because of land acquisition problems.