Rs 40,000-crore development projects in limbo in Andhra

By Surya DesarajuAmaravati, Dec 10 (PTI) Development projects worthmore than Rs 40,000 crore, including one related to the newcapital city, are i...

(Eds: Changing a word in para eight)By Surya DesarajuAmaravati, Dec 10 (PTI) Development projects worthmore than Rs 40,000 crore, including one related to the newcapital city, are in a limbo as the Andhra Pradesh governmentis caught in a fix over the utilisation of funds under theExternally-Aided Projects (EAPs).

Chief Minister Chandrababu Naidu himself soundedsceptical about the "benefits" of the EAPs but it was apolitical decision which he now cannot shy away from.

"It is difficult to understand about the immediatebenefit that would accrue to the state which is struggling toput its finances in order, while ensuring investments incapital works, so that growth does not suffer," he told theLegislative Assembly in the just-concluded session.

Under the Special Assistance Measure, announced by theCentre in September 2016 in lieu of Special Category Status toAP, the former was to fund the state for EAPs only "signed anddisbursed" during 2015-16 to 2019-20.

The AP government anticipated an amount of Rs 20,010crore under the Special Assistance Measure (SAM) but expressedinability to spend it within the stipulated five years.

As such, the state wanted the Centre to permit it toclear "other outstanding loans" towards EAPs and also use thegap to pay interest commitments to the Government of India,Nabard and other external agencies, a senior bureaucrat toldPTI.

The Union Finance Ministry rejected this proposal andalso refused to concede the state's demand to not make the SAMa part of the FRBM (Fiscal Responsibility and BudgetManagement) limit.

"It is an area of concern for us. The chief ministeris pursuing the issue with the Centre since the state is notdirectly borrowing rpt borrowing the money. As such, ourcontention is that it should be out of the FRBM limit," thebureaucrat said.

For over two years now, the state government has beenrequesting that the borrowing limit under FRBM Act be raisedto 4 per cent of the GSDP, given the state's precariousfinancial position post-bifurcation.

The Centre, however, has not agreed to it either, evenas the state has been borrowing quite heavily to make endsmeet. AP targeted to borrow Rs 30,019 crore during the currentfinancial year, excluding the EAPs.

Among the 13 EAPs proposed by the state, the AmaravatiCapital City Development Project is critical besides the Vizag-Chennai Industrial Corridor Development Programme.

Though the Department of Economic Affairs (DEA), underthe Union Finance Ministry, cleared the state's proposal for aUSD 500 million loan in 2016, the World Bank is yet to approveand sanction it.

Of the total project cost of Rs 4,749 crore, the WorldBank is expected to lend Rs 3,324 crore for the Amaravatiproject, under which critical infrastructure in the newcapital is supposed to be developed.

The Chief Minister wrote a letter to Union FinanceMinister Arun Jaitley on October 24, 2016 proposing to take upconstruction of residential school buildings in the state at acost of Rs 3,000 crore with funding from AIIB (AsianInfrastructure Investment Bank.

A government note on the "latest status" of EAPsstates that "the above proposal is in final stage (with thestate government) and not yet submitted to the DEA".

The state government also proposed the AP Rural RoadProject at a cost of Rs 4,234 crore with funding from the AIIBfor "providing new connectivity to unconnected habitations".

The DEA sought comments of the Union Rural DevelopmentMinistry in May this year. The Ministry, in turn, wrote aletter to the state government on July 31 asking it to "recastthe proposal". The state government is yet to do that.

Similarly, the Rs 4,500 crore AP Rural Water SupplyProject is stuck after the Screening Committee of the DEAasked the state to "recast the project financials byrestricting to USD 500 million USD".

The Union Health Ministry sought comments from thestate government last year on curtailing the AP Health SystemStrengthening Project cost from the proposed Rs 4,807 crore toRs 2,900 crore but the stateÂ’s comments are (still) "awaited".

In all, seven projects worth a total Rs 18,313 croreare languishing due to "no response" from the stategovernment, a senior official pursuing the EAPs said.

Though the Amaravati Capital City Development Project,too, has been shown as "approved", among the six EAPstotalling Rs 19,162 crore, it cannot actually take off tillthe World Bank "sanctions" the loan, he added. PTI DBV RSYNRB.

This is unedited, unformatted feed from the Press Trust of India wire.

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