Andhra Pradesh Chief Minister N Chandrababu Naidu has sought immediate assistance from the Centre to tide over the deteriorated fiscal health of the state and to undertake development projects to kickstart the economy.
“The economy of Andhra Pradesh is in the doldrums. We need collective commitment to revive the economy” Naidu said after meeting Union Finance Minister Nirmala Sitharaman on Friday.
The meeting with Sitharaman assumes importance ahead of the Union Budget to be presented later this month.
A senior state functionary said there is a big hole in the state finances due to mismanagement of the previous government.
“We are not seeking any special package or special category status. Short term financial assistance can be given as a soft loan or grant for economic revival of the state,” the person said.
The state has sought Comprehensive financial support for completion of the government complex and trunk infrastructure of the capital city of Amaravati. It has also sought the Centre’s support in the commissioning of the Polavaram National Irrigation Project.
It has also sought incentives for industrial development and an additional allocation under the 5-year interest-free capex loans to states for roads, bridges, irrigation and drinking water projects.
The person said the Naidu government is currently doing an exercise to determine the true health of the state finances and white papers in this regard will be published on July 18.
Sitharaman, sources said, gave a patient hearing to Naidu’s concerns and assured that she will look into the state’s demands within the broader fiscal constraints.
Naidu-led National Democratic Alliance (NDA) government was sworn in Andhra Pradesh on June 12. Naidu’s Telugu Desam Party (TDP) is a key stakeholder in the NDA government at the Centre as the Bharatiya Janata Party lacks a majority on its own.
The state government will present an interim budget in the third week of July for two months before a regular budget is presented in September, sources said.
Andhra Pradesh is one of the large states with debt-GSDP over 30% (at 33.5% in FY24) compared to the prudential level of 20% set by an expert panel. Additionally, the southern state’s outstanding guarantees/GDP is at 9%.
The guarantees, which are given by the state to its firms to raise funds for government programmes, are negative on the state’s credit profile and fiscally not prudent.
In the run up to the assembly elections, TDP had made several promises including three free gas cylinders per year to households; Rs 20,000 investment support for farmers per annum and an unemployment allowance of Rs 3,000 per month.
AP’s fiscal deficit was at 4.2% as per the revised estimate for FY24 against the prescribed limit of 3.5%. Sources said the state government has to take up the burden of paying massive unpaid subsidy bills to the power discoms.