HYDERABAD: In a bid to implement its flagship social initiatives like drinking water grid and housing scheme, Telangana state is hoping to get a loan of `1.5 lakh crore to `2 lakh crore from the World Bank (WB).
Interestingly, Telangana State (TS) is also knocking at the doors of NITI Ayog to get a relaxation on borrowing limit. Though the TS was making the demand for long before the Centre, the government turned towards the NITI Ayog after the AP government also choose the same route to get special status or funds under special package.
Chief minister K Chandrasekhar Rao told Arvind Panagariya, vice chairman of NITI Aayog that relaxation of borrowing limits is essential for infrastructure development.
“I need not emphasise the importance of increasing public investment to revive the economy which has been witnessing a slowdown in recent years. You have been advocating relaxation of fiscal deficit targets subject to additional borrowings being used for infrastructure development. I assure you that TS will use additional fiscal space on account of relaxation of borrowings limits for infrastructure development,” Rao told vice chairman of of NITI Ayog in his letter.
Apart from its flagship programmes of drinking water grid and housing scheme, the TS is also seeking funds to develop Hyderabad-Warangal corridor and to establish a power plant in Nalgonda.
In a recent meeting, the representatives of WB had offered loans at two interest rates to the state. “One is with a flexible interest of 1.5 per cent and the other a fixed interest rate of 3.3 per cent,” sources said. But, any change in rupee value would have its impact on flexible interest rate. The fixed rate is better, an official opined.
Meanwhile, AP has also joined the race to tap WB loans. “AP Chief Minister N Chandrababu Naidu is focusing on the development of infrastructure for the new capital. As Telangana has a capital city, we are focusing on other issues,” an official said.
Naidu faced stiff resistance from left parties during his previous tenure for obtaining loan from WB. Now, TS chief minister is also facing a similar situation, with Left parties sharpening its arsenal.
Finance Minister E Rajender, however, said: “Loan from any funding agency, including World Bank, will be accepted if the agencies agree to the conditional laid down by the State government. There is no question of accepting the conditions of the WB”.
TS Search for Loan Options
Requiring `1.5 lakh crore to `2 lakh crore for the next four to five years, the state government is looking at other sources, in case of WB’s reluctance to extend loans. “We can get loan from ADB in future. The BRICS (Brazil, Russia, India, China and South Africa) bank too is offering first batch of loans next year,” official sources said.