State chief secretary P Subrahmanyam confirmed the government's decision and told The Financial Express on Tuesday that he had directed state urban development secretary, K Nalinakshan, to further chalk out modalities.

Subrahmanyam said that he had called upon at least 10 leading financial institutions including IDBI, ICICI, IL&FS, HDFC, UTI to contribute at least Rs 50 lakh each for this project, adding that Nalinakshan would hold talks with these institutions. These institutions, he added, had agreed to make their contributions. Nalinakshan said that the hutment dwellers would be provided free houses on the lines of slum rehabilitation schemes primarily on railway lands. In arelated development, a memorandum of understanding was signed on Tuesday between the state government and the union railways ministry to set up a Mumbai Railway Vikas Corporation (MRVC) for implementing rail projects under the Rs 6,400 crore Mumbai Urban Transport Project-II and other projects.

The authorised share capital of MRVC would be Rs 25 crore with 51 per cent equity participation by the centre and 49 per cent by the state government. The MoU was signed by chief minister Manohar Joshi and union railway minister, Nitish Kumar. The function was attended by state railway minister Ram Naik, deputy chief minister Gopinath Munde, state chief secretary P Subrahmanyam and railway board technical member VK Agnihotri.

MRVC would be governed by a board of directors comprising six full-time and five part-time directors including a part-time chairman. The jurisdiction of MRVC would be upto Dahanu Road on western railway and Karjat, Kasara, Panvel and Khopoli on the central railway.

Funds for implementationof suburban rail project under MUTP-II including resettlement and rehabilitation of persons affected thereby, would be made available by the centre and the state government in the ratio of 50:50.

Nitish Kumar said that funds would be generated through revenue from commercial development of railway land and air space, budgetary support from the state government and railways, borrowings to be decided with mutual consent of state government and railways.

He added that bond issues can be floated to raise money. Naik said that though the World Bank wanted to impose surcharge on commuters travelling to/from and within the jurisdictional limit of MRVC, it has been decided not to resort to this measure at this juncutre. He said that the date and rate of surcharge would be mutually decided by the state and railways after substantial improvements were made in the suburban rail services. Joshi demanded that a separate zone for Greater Mumbai railway services be created immediately as over 54 lakh commuters use theseservices daily. Nitish Kumar declined to make any official announcement in this regard in view of the railway budget but added that a proper decision would be taken after the debate.