Maharashtra budget proposes SPV to securitise govt assets, raise funds for infra

Govt proposes setting up SPV named Maha Infra to institutionalise funds for infrastructure projects and act as a single window for aggregating land


The SPV envisaged raising Rs1 trillion in the next five years to finance capital expenditure of key infrastructure projects. Photo: Pradeep Gaur/Mint
The SPV envisaged raising Rs1 trillion in the next five years to finance capital expenditure of key infrastructure projects. Photo: Pradeep Gaur/Mint

Mumbai: The Maharashtra government has proposed setting up a special purpose vehicle (SPV) named Maha Infra to institutionalise funds for infrastructure projects and act as a single window for aggregating land held by various government departments for securitisation to raise money.

Maharashtra’s finance minister Sudhir Mungantiwar made this announcement while presenting the state’s 2017-18 budget in the legislative assembly on Saturday. The SPV envisaged raising Rs1 trillion in the next five years to finance capital expenditure of key infrastructure projects. The government is also exploring the option of converting Maha Infra into a non-banking financial company (NBFC) on the lines of Gujarat State Financial Services Ltd, Mungantiwar said.

“The SPV Maha Infra will look at alternative means of raising funds to finance infrastructure development. It will go in for securitisation of those government lands and assets which are neither in use nor are expected to be used in the next ten years. These lands would be escrowed to the SPV for raising funds via securitisation. In this option, the ownership of the lands and assets will remain with the government only,” said a senior official who is familiar with the proposal and who did not wish to be named. “Another benefit of this option is that the government would know the value of the assets it holds and can securitise to raise funds,” the official added.

In his budget speech, Mungantiwar said “securitisation of land would aid in raising funds through low cost loans, bonds, investment from large investors with long term horizon like national or international pension and insurance funds”. The SPV would be a need-based financing, fund raising, and advisory arm of the government, he added. “The government will also recruit a team of subject experts from varied fields for increasing the efficiency of the institution,” he added.

The government official said the government has felt the need for institutionalising such an SPV for a long time though the efforts gained momentum in the last couple of years. “The cost of big ticket infrastructure projects, especially those in a city like Mumbai, is extremely high and delays inherent in the option of public private partnership lead to further cost escalation. Even if the government sources funding from international lenders at economical rate of interest, it still adds to the debt burden. It is high time a leading state like Maharashtra thought of tapping into its own reserves of assets, mainly in the form of land, to see if those could be securitised to raise money,” the official said.

A senior Bharatiya Janata Party (BJP) minister, who is also associated with this proposal, said on the condition of anonymity that the union government was favourable to this proposal. “In fact the option to securitise our assets came from the centre only. Previously when this proposal was considered by successive governments, the emphasis was on monetising the assets but in that option the ownership of the assets does not stay with the government. Several government departments or agencies hold lands which they do not intend to use. For instance the Mumbai Port Trust owns large tracts of land in Mumbai which can be securitised and yet the ownership remains with the government,” the BJP minister said.

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