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Journalism of Courage
MUMBAI, OCT 6: Reflecting poorly on the state government8217;s falling fiscal health, rating agency, the Credit Rating Information Services of India Ltd Crisil on Wednesday downgraded its ratings on four irrigation firms of the government of Maharashtra to A SO from A SO.
The firms are: Konkan Irrigation Development Corporation, Maharashtra Krishna Valley Development Corporation, Tapi Irrigation Development Corporation and Vidharba Irrigation Development Corporation.
In a statement, Crisil said the downgrades reflect the deterioration in the fiscal profile of the Maharashtra government as evidenced in the persistent rise in the revenue and fiscal deficit to high levels precipitated by revision in pay scales for state employees.
It said the state8217;s attempts to correct the fiscal deterioration in the short to medium term may be constrained by its limited flexibility to contain expenditure on salary and debt servicing.
quot;A rapid rise in the level of Maharashtra government8217;s contingent liabilities isalso likely to impact its finances in future,quot; Crisil said. The state government bears the repayment obligations on the debt issued by the four corporations.
Crisil said the current ratings were supported by Maharashtra8217;s strong economic structure, its diversified industrial sector, a healthy economic growth, high income levels and superior demographic characteristics.
The downgraded bonds worth Rs 2,564 crore include issues from KIDC Rs 31 crore, MKVDC Rs. 2,134 crore, TIDC Rs. 91 crore and VIDC Rs. 308 crore.
The agency has also factored in the rising indebtedness of the government which has resulted in a significant budgetary deficit. Although the state proposes to initiate certain measures for revenue augmentation and improving its guarantee management, fiscal recovery in the long term would be contingent upon the government8217;s willingness to speedily implement significant revenue augmentation and fiscal reforms.
