Mantralaya sources told The Financial Express on Monday that the Maharashtra Krishna Valley Development Corporation (MKVDC) will require Rs 1,600 crore while the Maharashtra Life Authority will need Rs 700 crore. The Maharashtra State Electricity Board (MSEB) will need Rs 262 crore to acquire 30 per cent stake in the Dabhol power project and another Rs 500 crore for systems upgradation.

MSEB has already raised over Rs 500 crore and has planned an additional Rs 262 crore which could further increase if the rupee slide continues.

Interestingly, the empowered committee did not consider the need for the Rs 4,000 crore likely to be required by the Shivshahi Punarvasan Prakalp,a special purpose vehicle floated to provide 2 lakh houses free of cost to slum dwellers. The state housing department has not made any proposal in this regard as it was confident of raising the necessary funds -- about Rs 10,000 crore on its own.

The lead manager, SBI Capitals, and coordinators J M Financials, DSP Merrill Lynch and Kotak Mahindra are believed to have told the state government that it should not "bunch together" these projects but approach the market for an individual project or agency. They believe that the "market has the appetite for just Rs 2,000 crore" if the government decides not to bunch together all these projects.

The arrangers have also warned of "disastrous consequences" of a further dip in the rupee and uncertain market conditions. They have also brought to the notice of the empowered committee that the government has failed to fulfil necessary commitments in its previous attempts.

It must be mentioned here that the government, which raised more than Rs 1,200 crore for theMKVDC, had failed to make necessary budgetary provisions for the repayment. The government's attempt to raise Rs 500 crore in May for various irrigation corporations was a washout as there were many hurdles.

Ultimately, chief minister Manohar Joshi and state chief secretary P Subrahmaniam had to intervene and convince the banks and financial institutions to invest in the Rs 500 crore bond issue.

The state government has given a guarantee to various irrigation development corporations for raising funds through a bond issue. As a result, it will have to allocate a whopping Rs 31,973.61 crore to repay loans raised by these corporations.

According to Crisil, the state's ability to meet its financial obligations would depend upon successful implementation of economic reforms in power industry, transport and PSU disinvestment. The ability to fund emerging needs for asset formation in these sectors would also affect the state's financial health.

Apart from these corporations, the government has extendedguarantees and/or tripartite agreement to various bond offerings by MSEB and Maharashtra State Road Development Corporation. These corporations have a borrowing programme over the next five years which is also likely to be guaranteed by the government.

Given the similar tenure pattern of these borrowings, there could be bunching of repayments in 2003-2005 which could put pressure on government finances in this period.