AP to get meagre central funds for Polavaram

WHAT FACTS POINT TO

• Union Cabinet has accorded no legal status to the Special Package
• For Amaravati, it said Rs 2,500 cr already given, balance Rs 1,000 cr to be given
• Does this mean Centre would give only Rs 3,500 cr for Amaravati construction?
• Recently, Central government released Rs 450 cr for Amaravati
• Yanamala in budget speech said Centre would give Rs 1,500 cr, but Centre silent
• Union Cabinet says will bear 100% of remaining cost of irrigation component of Polavaram as of April 1, 2014 (total cost Rs 16,010.45 cr)
• But the new AP govt twice revised the project cost to around Rs 42,000 cr
• Central data says AP would get only Rs 5,000 crore as financial assistance

The Union Cabinet has given its approval for the special assistance measure for Andhra Pradesh by way of special dispensation in funding of Externally Aided Projects (EAPs) and funding of irrigation component of Polavaram project.

As per Section 94 of the AP Reorganisation Act, 2014, the Centre must provide special financial support for creation of essential facilities in the new capital city of Amaravati that includes essential infrastructure. But, according to the note issued by Union Finance Minister in September 2016, an amount of Rs 2,500 crore had already been paid as support for creation of new capital and a balance of Rs 1,000 crore would be paid in due course.

It means that the Central government has decided to extend a total financial assistance of Rs 3,500 crore for the construction of the capital city and it has already released Rs 2,500 crore, leaving a balance of Rs 1,000 crore. Recently, it released Rs 450 crore. The State would get only Rs 550 crore as financial assistance for the construction of Amaravati. However, the recent Union Cabinet note is silent on funds for Amaravati.

Surprisingly, the Andhra Pradesh government in its annual budget speech of 2017-18 presented by the Finance Minister stated that the Central government would release Rs 1,500 crore for the construction of capital city. In the Union Cabinet note, there is no mention of extending the legal status to special package to the state of Andhra Pradesh.

The Union Cabinet has even approved the 100% funding of the remaining cost of the irrigation component only of the Polavaram project for the period starting from 1-4-2014, to the extent of the cost of the irrigation component on that date. It also approved the special assistance for capital expenditure by way of repayment of External Aided Projects (EAPs) loans and interest signed and disbursed during 2015-16 to 2019-20 by the State.

As per statistics available, the Andhra Pradesh government has revised the estimates of Polavaram project twice after incumbent government came to power in 2014. Earlier, the project was accorded investment clearance by the Planning Commission for Rs 10,151.04 crore (at 2005-06 price level) in 2009.

Further, the Advisory Committee of Ministry of Water Resources approved the cost at 2010-11 price level as Rs 16,010.45 crore during January 2011, including power and drinking water component of Rs 2,868 crore. Prior to the passage of the AP Reorganisation Act, the Polavaram Project was being implemented by the Government of Andhra Pradesh with Central Assistance under the Accelerated Irrigation Benefits Programme (AIBP). An expenditure of Rs 5,135.87 crore had been incurred up to 31.3.2014 including a Central Assistance of Rs 562.469 crore.

The state government took initially the same estimate as project cost of Rs 16,010.45 crore including power and drinking water component of Rs 2,868 crore in 2014. But the new Andhra Pradesh government revised the estimate of Polavaram project to Rs 30,000 crore within four months and again it has so far revised the estimate to Rs 42,000 crore.

Here it is noteworthy to mention that the Union Cabinet note clearly mentions that 100% of the remaining cost of the irrigation component only starting from 1-4-2014 to the extent of cost of irrigation component as on that date. It means as on that date the Polavaram project cost is Rs 16,010.45 crore, but not the present cost of Rs 42,000 crore as estimated by the Andhra Pradesh government.

As per the Cabinet note, the Central government will assist only irrigation component but not the cost of power and drinking water, after deducting Rs 2,868 crore. The total project cost of Polavaram will come to Rs 13,142 crore and an expenditure of Rs 5,135.87 crore had been incurred up to 31.3.2014 including Central Assistance of Rs 562.469 crore under AIBP.

The central government has released Rs 3,000 crore that includes Rs 1,981 crore NABARD loan in last two years. According to the Central government data, the state of Andhra Pradesh would get Rs 5,000 crore as financial assistance to the Polavaram project. However, as per the present estimate of Rs 42,000 crore, the Andhra Pradesh government would have to spend Rs 25,000 crore for completion of Polavaram project.

As per the Union Cabinet note of September 2016, the Central government already provided a Special Assistance of Rs 1,976.50 crore to the state during 2016-17. The amount includes Rs 1,176.50 for resource gap, Rs 350 crore for the development of 7 backward districts covering Rayalaseema and North Coastal region and Rs 450 crore as assistance to the capital city.

Apart from this, the Ministry of Water Resources, River Development & Ganga Rejuvenation has also provided Rs 2,081.54 crore for the Polavaram Irrigation Project during the current financial year. Thus the Central government, after the enactment of the Reorganisation Act, has provided a central assistance of Rs 10,461.04 crore to the state of Andhra Pradesh which includes Rs 4,403 crore released during 2014-15, Rs 2,000 crore released during 2015-16 and Rs 4,058.04 crore released in 2016-17.

Besides this, the recent Union Cabinet note mentioned under the special assistance measure to Andhra Pradesh, the additional Central share, the state might have received during 2015-16 to 2019-20, if the funding of Centrally Sponsored Schemes (CSS) would have been shared at the ratio of 90:10 between the Centre and the State. The special assistance would be provided by way repayment of loan and interest for externally aided projects (EAPs) and disbursed during 2015-16 to 2019-20.

As per procedure in vogue, the sharing of CSS between Centre and State is in different ratio patterns like 60:40 and 50:50 and 90:10 for different schemes. But the Central government will now treat the sharing of CSS as 90:10 ratio for all the schemes. However it will not reimburse the balance amount that state would have got on account of 90:10 ratio in last two years.

Eventually, the Andhra Pradesh government may get only Rs 5,000 crore towards Polavaram project and Rs 550 crore towards the construction of capital city of Amaravati.

By Gudipati Rajendera Kumar