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Gujarat Budget: Rs 200 cr for buying more equity in GIFT City project

Funds to kick-start work for Surat Metro project and to refurbish Alang ship-breaking yard in Bhavnagar

Written by Avinash Nair | Ahmedabad | Published: February 27, 2020 3:14:09 pm
Gujarat, gujarat budget, gujarat annual budget, gift city, Bhavnagar, Vijay Rupani, Nitin Patel, metrorail project, indian express Chief Minister Vijay Rupani and his deputy, Nitin Patel, ahead of presenting the budget on Wednesday. (Express Photo)

In an important move to buy more stake in the GIFT City, Gujarat government made a provision of Rs 200 crore in the annual budget for the year 2020-21. It also allocated funds to kick start work on metrorail project in Surat and refurbish the Alang ship-breaking yard in Bhavnagar.

Stating that the GIFT City project, which houses 13 banks, 19 insurance companies, more than 50 capital agencies, two international exchanges, was “marching ahead to become a global financial hub”, Deputy Chief Minister Nitin Patel who presented the state budget on Wednesday said “trading of approximately 600 billion dollars has been carried out last year”. At present, the Gujarat government owns 50 per cent of the equity in the project, while the other half is owned by crisis hit-IL&FS (Infrastructure Leasing and Financial Services Limited).

“A provision of Rs 200 crore has been made for share capital subscription to GIFT City,” said Patel in his speech. On the Rs 200-crore budgetary provision for GIFT City, government officials said that the money provided in the budget will be used to buy the stake from IL&FS. “IL&FS is no more interested in furthering its presence in the project. So the government has to reconstitute the whole thing. Land is with the government and so the majority stake is with the government. The other partner is not able to promote the project and so we are thinking of increasing the equity,” Milind Torwane, Secretary (Economic Affairs), finance department told The Indian Express.

According to state government officials, Mumbai-based valuation and transaction advisory firm, RBSA Advisors (headed by chairman and founder RB Shah) that was appointed by IL&FS to arrive at the right valuation of the 50 per cent stake that the company holds in project, has submitted it’s valuation to the private entity. However, the amount is yet to be made public by the state government or IL&FS. In 2007, IL&FS invested Rs 32.5 crore for 50 per cent of the shares in the project.

Provisions for Alang

Among the other industrial and infrastructure projects for which budgetary provisions were made include Rs 750 crore, which will help develop 15 new ship recycling plots at Alang ship-breaking yard in Bhavnagar district of Gujarat. Announcing this project, Nitin Patel said, the project will not only upgrade 70 existing plots, but will also develop the area that also have a number of steel rolling mills. “Under this project, the existing 70 ship recycling plots will be upgraded and 15 new plots will be constructed, which will generate employment in a big way,” the minister said during his speech.

Surat Metro

Stating that the Centre has accorded sanction to metro rail project in Surat, Patel said Rs 450 crore has been provided to commence the Phase-I of the project and to also aid the ongoing progress of the Ahmedabad metro. The government also made a provision of Rs 1450 crore for the 2600 units that were sanctioned under the MSME scheme during the current fiscal. An additional provision of Rs 100 crore has been made to rehabilitate viable sick industrial units and another Rs 95 crore has been reserved for holding the Vibrant Gujarat event during the next fiscal.

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