Andhra Pradesh capital project likely to run into fund problems

Hyderabad: Andhra Pradesh’s capital project is facing funding problems. After pooling 30,000 acres for the capital city the government will face a big challenge on the land development front. To build roads, drains and other facilities the government needs around Rs 25,000 to Rs 30,000 crore.

Agriculture minister Prattipati Pulla Rao who is a member of the cabinet sub committee on land pooling said that the government will develop the land spending Rs 75 lakh to Rs 1 crore per acre. Earlier, the AP government was planning to give the land to developers by giving them a share. But now it has decided to develop it on its own.

At present all funds mobilized by the government has been used up for waiving farm loans. For this the government has set up a Farmer’s Empowerment Corporation and has allotted Rs 5,000 crore. 

Finance department estimates that the waiver of farm loans requires around Rs 25,000 crore. Even if the government wants to develop the land in a phased manner it will require huge amounts.

At present the AP government has to depend on borrowings and Central assistance. The government has borrowed around Rs 9,000 crore in the last six months of the fiscal. The limit for borrowings in a financial year is around Rs 20,000 crore. If the government decides to go for borrowings it will get around Rs 10,000 crore this financial year. Then the only option left is the Centre.

Finance minister Yanamala Rama Krishnudu said the AP Bifurcation Act is not clear on Central assistance for the capital city. He said the Centre is saying if the state is ready with the land then it will sanction funds. Mr Yanamala said the state will request the Centre to sanction funds for the developing the land.