Looks like the fears of some about Amaravati loans will now be put to rest. The Central government has decided to convert the Rs 15,000 crore loan money from multilateral agencies into a grant for the state.
The loan being converted to a grant is almost final as it is not being reflected as borrowings under Externally Aided Projects (EAP) from the World Bank and Asian Development Bank.
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This will take off the burden of interest and loan repayment from the Andhra Pradesh government, according to a senior official in AP government.
Till now, the AP government has taken Rs 31,000 crore from different organisations – Rs 15,000 crore from the World Bank and ADB, Rs 11,000 crore from HUDCO and Rs 5000 crore from German Bank KfW.
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The total estimated cost of Amaravati project is expected to be Rs 71,000 crore. Already tenders worth Rs 58,000 crore have been approved. During presenting the Union Budget, Finance Minister Nirmala Sitaraman had said that the Center would give Rs 15,000 crore in current and future years.
Subsequently, the state got approvals for Rs 15,000 crore from the World Bank and ADB. The Center’s move will reduce public debt of AP and interest outgo.
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The Chandrababu-led alliance government started off with a huge debt and unpaid dues. The estimated interest outgo is Rs 34,998 crore. This is 16% of state’s revenue receipts, according to a story in Business Line.
As of now, the AP government has to pay Rs 48,000 crore under various heads. If it gets the grant, it will be able to go for additional borrowings to meet the fiscal deficit.
