There is good news for fund-starved AP. The Central government will release Rs 3,000 crore for the Polavaram irrigation project. This became possible through a loan that the Centre has taken from Nabard. The Union finance ministry has asked the state government where to include the amount — in the Fiscal Responsibility and Budget Management limit of the Centre or the state?
In its reply, the AP finance department said that this amount should be included in the Centre's FRBM limit since Polavaram was a National Project. The AP government is seeking 100 per cent funding from the Centre for its completion.
The Union finance ministry has proposed to release this sum of Rs 3,000 crore on a 70:30 ratio. This means that the Centre's share is 70 per cent while the state's will be be 30 per cent. But Union water resources minister Uma Bharathi has opposed this proposal, instructing the finance ministry to release these funds on a 90:10 ratio, making the Centre's share 90 per cent and the state government's share 10 per cent.
The Centre had allotted only Rs 100 crore in the current year's budget for the Polavaram Project while the state government had allotted Rs 3,000 crore for it in its budget, under the impression that the Centre would release more funds for the project. Objecting to the Rs 100 crore grant, the state government asked for sanction of more funds to complete the project in the scheduled period.
The state government had even thought of asking the Centre to allow borrowings for the project. However, it was advised that since it is a national project it is also the Centre's responsibility to complete this project. AP wants to complete the project by 2018-end a year ahead of the general elections.