Devendra Fadnavis-led BJP govt revises costs of two choppers it was to buy, calculating new amount after pegging the rupee at Rs 80 to the dollar.
Mumbai: As the Narendra Modi government faces sharp criticism for the continued devaluation of the Indian rupee, a BJP-ruled state appears to be bracing for an even sharper plunge in the value of the currency.
The Maharashtra government, led by the BJP, has now revised the cost it would entail in buying two helicopters it had first moved to acquire in May, after pegging the value of the Indian currency at Rs 80 to the US dollar.
The rupee touched a low of Rs 72.05 Wednesday.
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The government’s May approval for the purchase had calculated the cost after valuing the rupee at Rs 70 to the US dollar. The revised approval has pushed up the cost provision by at least 14 per cent on both choppers.
The state government is buying a Sikorsky S76D helicopter for VIP travel and another Airbus H145 chopper to aid in its anti-Naxal operations.
As per the original approval for the purchases, dated 8 May, 2018, the cost of the Sikorsky, which will be mostly used by the CM, was estimated to be Rs 127.11 crore, with the rupee at Rs 70 per US dollar.
As per the revised approval pegging the rupee at 80, the cost provision has been increased to Rs 145.27 crore.
For the Airbus too, the original approval was for Rs 72.43 crore, while the revised approval, preparing for a further devaluation of the rupee, is for Rs 82.77 crore.
Just contingency plan, say officials
Senior Maharashtra government officials, however, said the revised approval does not mean that the state thinks the rupee will breach the 80-mark but is just a contingency plan to avoid constant paperwork.
“When we decided to buy the choppers, the rupee value was Rs 63 to the dollar. By the time we finalised the purchase, the value was Rs 70 and now the rupee is around the 72 mark,” a senior official said.
“The payment for these purchases is going to made in phases over 14 months and we cannot spend any additional amount without having the government’s sanction as per procedure,” the official said.
“Considering all this, we decided to take Rs 80 as the value of the rupee to the dollar only to avoid repeated file movement in case the currency dips further in the future.”
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The official clarified that the state government will make the actual payments for the helicopters on the basis of the prevailing value of the rupee at that time, which may be much lower than Rs 80 to the US dollar.
The state’s general administration department also issued a corrigendum to its resolution Tuesday night, to clarify that the actual purchase amount will be as per the rate of the rupee at the time of payment.
“In 2011 too when the state government bought helicopters, at the time of placing the order the rupee was valued at Rs 53-54 to the dollar, while the amount had jumped to Rs 60 at the time of actual purchase,” the corrigendum said.
Of greater concern than the price of two choppers would be the impact rupee depreciation will have on the cost of servicing foreign loans. Money is being borrowed from Japan and elsewhere to pay for capital intensive infrastructure projects, including the bullet train.