This is a representational image MUMBAI: In its last meeting Sunday, the state cabinet cleared loan guarantees worth almost Rs 30,000 crore to the state power utility, MSEDCL , to repay its debts. In doing so, the cabinet went against the advice of the finance department which warned that cumulative outstanding guarantees were already about Rs 1.5 lakh crore.
This was Rs 69,596 crore (86%) higher than the limit on contingent liabilities according to the state’s budgetary management norms, it said. A contingent liability is a potential payout the state could have to make in future. When a loan is guaranteed, govt has to repay it if the utility fails to do so.
The state’s cumulative outstanding guarantees have trebled from Rs 51,263.3 crore in March 2022. Fin dept opposed loan guarantee for MSEDCL The state finance department opposed the energy department’s proposal for a guarantee for loans worth Rs 29,995 crore and said it should consider raising loans independently.
The finance department warned that cumulative outstanding guarantees by the state by 2024-25 were already Rs 1.5 lakh crore. Along with debt, contingent liabilities are part of the total financial burden on the state.
The cash-strapped state already faces a debt of Rs 7.8 lakh crore. By March 2022, the cumulative outstanding guarantees granted by the state were Rs 51,263.
3 crore. Since then, the state had approved guarantees worth Rs 93,014.3 crore.
The cumulative outstanding guarantees sanctioned by the st.