A huge loss for Bengal
At the end of 2006, the state government had disbursed the first part of its support to Tata Motors in the form of a soft loan of Rs 200 crore at an interest of 1 per cent per year repayable in five equal annual instalments from the 21st year from disbursement of the loan, entailing a lock-up of the capital and loss of interest income on the amount for the entire tenure.
At a simple rate of 12 per cent a year, the interest subsidy would cost the state about Rs 25 crore a year.
The state had committed to extend a loan of around Rs 400 crore a year at 0.1 per cent interest, payable monthly, for 30 years, as a matching amount for the value added tax (VAT) received by the state at the rate of 12 per cent on every car sold.
The 12 per cent VAT on the Rs 1 lakh base model would go up if more of the upper-end versions of Nano were sold, so the amount of the loan to be extended to TML could surge.
Image: Indian truck drivers sit in the shade of their vehicle as they wait in line on the National Highway at Palsit, some 80 Kms north of Kolkata. | Photograph: Deshakalyan Chowdhury/AFP/Getty Images
Also read: Tata Nano to roll out from Gujarat!
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