Bhubaneswar: The state government on Tuesday inked an MoU with the Vedanta Group to set up a 500-bed medical college and hospital in Kalahandi district to upgrade the region's existing health care infrastructure.

Chief minister Naveen Patnaik, who was present when the deal was signed, said: "The medical college will fulfil the long-cherished dreams of the people of Kalahandi and meet their basic health needs."

Around Rs 350 crore will be invested in the college and hospital that will come up at Bhawanipatna in Kalahandi. Vedanta's Lanjigarh alumina refinery plant is located 70km from Bhawanipatna.

While the state government will spend Rs 250 crore, the Vedanta Group will invest Rs 100 crore in the project. The medical college will have 100 MBBS seats.

While director, medical education and training, Sonamali Bag signed the MoU on behalf of the state government, Vedanta director (corporate strategy) Rahul Sharma did it for Vedanta.

Health minister Pratap Jena said: "To meet the demand of doctors in the public health care system and improve tertiary health care facilities, the state government has taken the initiative to set up nine medical colleges in the state. While seven medical colleges will be set up with government funds, two government colleges will come up with the support of public undertakings."

He said two medical colleges- Saheed Laxman Nayak Medical College in Koraput and Pandit Raghunath Murmu Medical College and Hospital in Baripada - have already started functioning.

Two other medical colleges and hospitals, one each in Balasore and Balangir, will come up with an investment of Rs 365 crore.

However, the BJP has smelled politics behind the move. State BJP vice-president Samir Mohanty said: "Keeping the elections in mind, the state government has signed the MoU."

The BJD denied the charges of the BJP.