Budget 2018: Andhra CM writes to FM for grant through NABARD for projects

He requested that certain projects be funded in the form of 'grants' instead of loans from external agencies

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Andhra Pradesh Chief Minister N Chandrababu Naidu has written a fresh letter to Union Finance Minister Arun Jaitley, requesting that certain projects be funded in the form of "grant" by the Centre through NABARD, instead of loans from external agencies.

The state government had earlier expressed inability to spend a quantum of funds under the Special Assistance Measure (SAM) announced by the Centre within the stipulated five years.

The chief minister had told the state Assembly during the winter session that his government saw "no immediate benefit" from the SAM under externally-aided projects (EAPs) after the Centre turned down the state's plea to let it use the money to clear outstanding loans.

Naidu wrote a letter afresh to Jaitley on January 5 stating that the AP government expected to receive Rs 16,447 crore under the SAM from 2015-16 to 2019-20.

"AP Government has sent proposals for various projects to the Department of Economic Affairs (DEA) under the EAP.

"I would like to mention that projects under the EAP will consume a lot of time for grounding and completing, considering the elaborate procedures involved in getting clearance and approval from external funding agencies," the chief minister said in the letter.

"The state government will not be in a position to consume the entire special assistance amount within the five-year period ending 2019-20, including (that for) ongoing projects signed after 2015-16," he added.

Therefore, Naidu suggested, a "special dispensation amount" be provided to Andhra Pradesh for specified projects from National Bank For Agricultural and Rural Development (NABARD) instead of loans from external agencies.

"It should be disbursed as a grant from the Government of India so that this will not form part of the state FRBM (Fiscal Responsibility and Budget Management) limits. This will facilitate the state government for early commencement of projects and to avail of the SAM announced to our state," the chief minister said.

In his letter, Naidu listed six projects that require a total funding of Rs 16,725 crore.

Of these, the DEA has already approved the AP Roads and Bridges Reconstruction Project and AP Mandal Connectivity and Rural Connectivity Improvement Project (Rs 3,200 crore each) with a proposed loan from Asian Infrastructure and Investment Bank (AIIB).

The Rs 4,500 crore AP Rural Water Supply Project, with a loan from AIIB, has not been cleared by the DEA yet.

The cost of another project - Construction of Residential School Buildings - which too is pending approval of the DEA, has increased from Rs 3,000 crore to Rs 3,341 crore as per the latest estimate submitted by Naidu. This was also supposed to be taken up with a loan from AIIB.

Now, the state government is seeking funds for these projects as a grant from the Centre and not through loans from foreign banks.

The state government has also submitted two new projects - Amaravati Greening Development (Rs 1,484 crore) and AP Backward Area Rural Development Project (Rs 1,000 crore) to the Centre for funding through NABARD.