naidu-seeks-liberal-central-funds-for-his-dream-projects

Unlike his Bihar counterpart Nitish Kumar, Andhra Pradesh Chief Minister Nara Chandrababu Naidu chose not to press with the demand for granting his state special category status (SCS). 

 

Instead, he adopted a more pragmatic approach during his interactions with Prime Minister Narendra Modi and a host of Union Ministers. He sought liberal central financial assistance for rebuilding the new capital city of Amaravati, his dream project, the multipurpose Polavaram irrigation project and for developing the state’s backward regions.

 

Though SCS was a key emotive issue in the recent past, it has lost its appeal now in the wake of the central government doing away with the practice based on the recommendations of the 14th Finance Commission. 

 

Since the commission had considered the level of backwardness of states in the proposed transfer of funds to states, the idea of special category status has now become irrelevant.

 

The idea was that adequate resources would be allocated through tax devolution and grants to address interstate inequalities. The special category status is therefore restricted to the three hill states of Jammu and Kashmir, Himachal Pradesh and Uttarakhand and those in the Northeast.

 

Realising the futility of insisting on the special status demand in the present context, Naidu, whose support is crucial for the survival and stability of the NDA government, is keen on extracting adequate funds for projects that are close to his heart.

 

During his two-day visit to Delhi, his first since assuming office on June 12, Naidu had a hectic schedule, meeting the Prime Minister and chairman of 16th Finance Commission Arvind Panagariya and half a dozen Union ministers including Finance Minister Nirmala Sitharaman, Home Minister Amit Shah, Road Transport and Highways Minister Nitin Gadkari, Commerce and Industry Minister Piyush Goyal and Agriculture and Farmers Welfare Minister Shivraj Singh Chouhan, among others.

 

The Chief Minister sought central handholding for the state finances in the short-term, incentives for industrial development and additional allocation under the Scheme for Special Assistance to States for capital investment, targeting essential sectors such as roads, bridges, irrigation, and drinking water projects.

 

“The preference would be to get money released for big-ticket projects such as the Polavaram national irrigation project and development of Amaravati,” the sources in the Chief Minister’s Office said.

 

Andhra has asked for central assistance in building Amaravati as the “sole capital”, and an allocation of Rs 15,000 crore towards essential infrastructure development. The provisional estimate to construct Amravati city is around Rs 1 lakh crore, of which essential infrastructure such as the Raj Bhawan, high court, secretariat, Legislative Assembly and Council and the land development and trunk infrastructure could cost over Rs 50,000 crore in the next five years.

 

Polavaram project’s total cost stood at around Rs 55,500 crore when it was approved by the Technical Advisory Committee in 2019.

 

Naidu conveyed to the PM that Andhra’s growth has plummeted, revenue receipts have tapered, and liabilities peaked because of the “unproductive expenditure and fiscal hara-kiri, marked by the exploitation of natural resources for personal use and no focus on the development of human resources”, of the previous YSR Congress Party regime.

 

Andhra Pradesh, he explained, is “severely constrained” by lack of financial resources. “Committed expenses, including salaries, pensions and debt servicing, exceed the state's revenue receipts, leaving no fiscal space for productive capital investment," Naidu told the PM.

 

He pointed out that the previous government resorted to indiscriminate borrowings, marked by hypothecation of future excise revenues and pledging of government buildings, combined with large-scale diversion of funds, which resulted in a situation of high public expectation and acute scarcity of resources.

 

"There is no other way to face such a challenge except by way of financial handholding by the central government," Naidu said.

 

According to the state government data, the public debt of Andhra Pradesh has increased from 31.02 per cent of the Gross State Domestic Product (GSDP) in 2019-20 to 33.32 per cent in 2023-24 fiscal, indicating deterioration in the fiscal health of the state in the last five years.