GMADA's Massive Fundraising Plan
The Greater Mohali Area Development Authority (GMADA), already under a debt of nearly Rs 8,000 crore, has initiated its largest-ever fundraising exercise of Rs 15,000 crore from the market. The authority has issued a request for proposal (RFP) to appoint a merchant banker-cum-fund arranger and financial adviser to manage the borrowing through bonds, debentures, or loans. The selected agency will devise the strategy, obtain credit ratings, secure approvals, and list the bonds. Funds must be mobilized within nine months of signing the contract, with Rs 5,000 crore raised in the first three months after receiving an investment-grade rating, another Rs 5,000 crore in the next three months, and the balance within the stipulated period.
Repayment Concerns and Interest Burden
The plan has raised concerns about repayment, as the borrowing could entail an annual interest burden of around Rs 1,500 crore over the next 10-20 years. Sources in the Housing and Urban Development Department said GMADA had already contributed nearly Rs 10,000 crore to the state government from its receipts. A senior official stated that the new funds would be used to fast-track infrastructure projects and land acquisitions. However, reports suggest a significant portion may be diverted to finance welfare schemes ahead of the 2027 assembly elections.
State Government's Recovery from GMADA
The state finance department has already recovered over Rs 8,000 crore from GMADA and other authorities under the Right to Fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement (RFCTLARR) Act, 2013. Citing Section 10(3) of the Act, the state maintains that development authorities must either develop equivalent cultivable land or deposit an amount equal to the value of acquired land. The government claims to have spent Rs 94,443 crore on food security since the Act came into force.
Future Land Acquisitions and Audit Concerns
More funds are expected to be sought for upcoming land acquisitions, including nearly 11,000 acres in Mohali and New Chandigarh. Earlier this year, the Accountant General (Audit), Punjab, questioned the transfer of Rs 6,400 crore from development authorities under the Act, stating such funds must remain ring-fenced in the Public Account for food security, not merged into the Consolidated Fund for general use.
