Vijayawada: Experts question bonds for capital

Vijayawada: The decision to float bonds of Rs 1,000 crore for the development of Amaravati capital by the Chief Minister has attracted the attention of financial experts. The state government has to approach the RBI, SEBI and Ministry of Finance before going for such a huge task.

It is learnt that the failure of consultants like McKinsey in bringing in investments to the capital, has prompted the Chief Minister to take this decision. Professor of Economics Dr L.S.N. Prasad said the construction of capital has become the sole agenda of the present government, even though it was not mentioned in the TD manifesto.

“Most of the assurances given in the TDP manifesto were shelved and a new avatar has been taken by the chief minister,” he said and added that the preparation for the construction of the capital was hectic in the early years of the government.”

“They approached three countries, particularly Singapore, and wanted to follow Swiss challenge, which was a method followed earlier, only in two countries then.
“It is one of the lesser known and even lesser-used methods of public procurement for core and social infrastructure projects,” he said.

Recalling the oft-repeated words of the Chief Minister that without even a single paise investment, everything was coming to the capital’s doorstep, Dr. Prasad questioned as to why the government is now going for bonds worth Rs 1,000 crore. What happened to the grant from the Union Government and Hudco loan, he asked.

“The Hudco loan and the public bonds will be a great burden for the future generations of Andhra Pradesh,” he said, and added that if the government starts issuing the bonds, the Central government will not allocate the funds.

“Who permitted the present government to issue the public bonds? Did SEBI and RBI accord permission for this,” he asked and also wanted to know the lock-in period of these bonds.

No clarity on financial aid to capital
A query about the figures regarding financial assistance to capital Amaravati had irked CRDA commissioner Dr Cherukuri Sreedhar during an interactive session organised by the CRDA on November 18, last year.

While the media adviser’s communiqué issued in the same week had suggested Amaravati to get Rs 17,500-crore financial assistance, the CRDA Commissioner said it was Rs 14,500 crore.

However, he saved his face by stating that there was a lengthy process in the release of funds from the financial institutions, as it has to undergo three stages of commitments, documentation and release of funds.

The commissioner said that the Central government sanctioned Rs 2,500 crore, the Hudco was likely to sanction Rs 7,500 crore and the World Bank $1 billion, including $500 million in the first phase for the development of Amara-vati capital city in phases.

He said Andhra Bank has come up with a proposal to support Amaravati with a loan of Rs. 5,000 crore, and that proposal was under examination. He said the UK was likely to sanction $1 billion for investment in private sector infrastructure.

Interestingly, later neither principal secretary Ajay Jain nor CRDA administration gave the exact details about the financial assistance to be extended from funding agencies.