Mumbai At a time when Maharashtra is facing a financial crisis, with a debt burden of more than Rs4 lakh crore, the government plans to invest in small and medium enterprises (SMEs) related to defence and aerospace manufacturing sector by creating a venture capital fund of Rs500 crore.Venture capital fund is used to seek help from private firms for SMEs with strong growth potential. The board of the state-owned Maharashtra Industrial Development Corporation (MIDC) recently cleared the plan to invest Rs300 crore towards the fund, which will be managed by Industrial Development Bank of India (IDBI) Capital. Chief minister Devendra Fadnavis is the chairman of the board.Sanjay Sethi, chief executive officer (CEO), MIDC, said IDBI capital has been selected as investment manager for the fund. The company has also committed to investing Rs50 crore (10%) towards the fund.The cash-strapped state has a debt of Rs4.13 lakh crore, the highest in the country, which could spiral up to Rs4.40 lakh crore. The financial stability was further affected when the government recently announced a farm loan waiver of Rs34,022 crore. The state finance department is already considering a cut of 25% on development spending across departments to reduce the financial burden.Companies investing in Maharashtra will only be considered for the fund, said Subhash Desai, state industries minister. “This is not an expenditure, donation or charity, but an investment which will grow as the fund grows,” Desai said, adding, “We can’t stop progressing. Debt and farm loan waiver are the challenges that we will have to face, but the state cannot deprive the stakeholders. Strengthening SMEs will improve state’s strength. A serious competition is on among states to attract investment. This is another step to stay ahead.”The Opposition criticised the decision saying the move is to hide failure of ‘Make in India’ and ‘Make in Maharashtra’ initiatives. “The state will spend Rs500 crore to attract investment in SMEs only to hide its failure in attracting industries. The government has claimed investment of lakhs of crores, but the reality is grim,” said NCP spokesperson Nawab Malik.The state is expecting dramatic growth in the venture capital fund as the Centre plans to allow foreign defence companies to invest in the venture fund in lieu for their offset responsibilities -- an agreement to gain benefits on spending on defence equipment.. It means the contribution to this fund will be calculated as a part of their offset responsibility. If it happens, the fund will become more viable and its size will also increase drastically creating more scope for investment, sources revealed.