Since the announcement of some good initiatives for Andhra Pradesh in the Budget by Union Finance Minister Nirmala Sitharaman, there is a sense of optimism not only in the ruling NDA alliance in the State, but also among industrialists, businessmen and the general public. .
There is a sense that the NDA-led Government at the Center has given great importance to the State and cherished the spirit of the alliance.
Chief Minister N. Chandrababu Naidu’s observation that the aid provided is like ‘oxygen’ to the crisis-hit State shows the inherent happiness factor.
But economists who have been summarizing budget speeches for decades need more clarity, despite the ‘unanimous and clear’ message that the Union Government is aligned with the State Government.
The Finance Minister has said that the Union Government respects the State Government’s decision to build a greenfield capital in Amaravati and will support it by providing ₹15,000 crore through various multilateral agencies during the current fiscal, followed by more in the coming years.
But economists say the funding aspect needs to be clearer.
“In the post-Budget press conference, the Finance Minister clarified that ₹ 15,000 crore will come through multi-lateral development aid, which will be borrowed from multilateral banks, be it the World Bank or ADB or AIB,” said KC Reddy, former Head of the Department of Economics, University Andhra and Chancellor of Rajiv Gandhi University of Knowledge Technology.
“It is clear that the funding is in the form of a loan. Though he has mentioned that the modality needs to be worked out, it is likely that the State government will have to repay the loan with interest. There is a need to have more understanding in terms and conditions, and interest rates. It would be better if the Union Government gives at least ₹ 3,000 crore to ₹ 4,000 crore as grants, and the rest as funding through multilateral agencies. ,” said Prof. KC Reddy.
“The ₹ 15,000 crore grant is a better option than the Union Government facilitating loans from multilateral agencies,” said Rokkam Sudarsan Rao, former Chancellor of Vikrama Simhapuri University and former member of AP State Finance Corporation.
“But involving multilateral institutions such as the IMF, ADB, WB, or AIB can benefit the State Government in the long term, because it will foster confidence among investors and private entrepreneurs,” said Prof. Sudarsan Rao.
Another important announcement made by Ms. Sitharaman was about the Polavaram project, where he said that the Center has agreed that the project is a national project and should complete it.
But he also clarified that it has been reported as a national project, the State Government in 2014 has agreed to implement it. The government has also received approval from the Cabinet on various aspects such as the RR package under the LARR Act 2013. The approval was also given to the height of the dam.
“We are committed to providing funds until the work is completed. We have given some funds approved by the Cabinet. We will also solve new problems that arise later, because this is a national project and it is our responsibility. Further funding, whether it will be a grant or multilateral agency, we are looking for. We will together with the State Government to understand new issues such as the submergence of new villages and others in the near future. We are committed to helping the State to solve it, because this is a lifeline for the State and will improve food security .This definitely instills confidence in the people of the country,” said Prof. Sudarsan.
Budgeting is all about translating policy decisions and promises into tangible numbers. There are no numbers on the Polavaram issue, said Prof. KC Reddy, added that it may be earlier, as the FM has said that the Union Government is working with the State Government.
Be it funding for Amaravati or completing Polavaram, or funds for the development of backward districts, or the development and operation of the Kopparthi industrial node and the development of the Visakhapatnam-Chennai industrial corridor, these announcements will have a positive effect and should bring private investment, Prof. Sudarsan said.
“Mr. Naidu is in a better position to bargain with the Union Government this time, and has the ability to get the best and more for the State,” economists said.–eom
