TDP seeking more than $12 billion financial aid from Union government: Reports

Andhra Pradesh Chief Minister Chandrababu Naidu met Prime Minister Narendra Modi on Thursday, 4 July, in New Delhi.

BySouth First Desk

Published Jul 06, 2024 | 12:12 PM Updated Jul 06, 2024 | 12:12 PM

Chandrababu Naidu meets PM Modi

According to a recent Bloomberg report, Chandrababu Naidu-led TDP is seeking financial support from the Union government to the tune of $12 billion in the form of aid for Andhra Pradesh.

The Andhra Pradesh Chief Minister met Prime Minister Narendra Modi on Thursday, 4 July, in New Delhi.

During the meeting at the PMO, the TDP chief —a key NDA ally —highlighted the unique challenges faced by Andhra Pradesh following its bifurcation in 2014. He emphasized the need for increased central support to accelerate the state’s growth trajectory, advocating for enhanced assistance in lieu of special category status.

Following the meeting, Naidu expressed confidence in Andhra’s potential to “re-emerge as a powerhouse among states” under PM Modi’s leadership.

“I am confident that under his leadership, our state will re-emerge as a powerhouse among states,” Naidu said in a post on X.

He also described the meeting as “very positive and focused on constructive outcomes”.

Also Read: Amid TDP’s crucial support at Centre, demand for ‘Special category Status’ to Andhra comes to fore

Financial woes of Andhra Pradesh

The meeting focused on key issues ranging from financial assistance to infrastructure development, an official statement said.

The Polavaram Project, a national irrigation initiative crucial for Andhra’s agricultural sector, topped Naidu’s list of priorities as he pushed for expedited support in commissioning this vital project.

On the state’s fiscal situation, the chief minister said, “Andhra Pradesh continues to grapple with the repercussions of the unscientific, unfair, and unjust bifurcation of 2014.”

He added that the previous administration’s “miserable governance marked by malice, corruption and misgovernance” had further deteriorated the state’s economic condition.

Naidu requested short-term financial handholding from the Centre, citing “indiscriminate borrowing” and “large-scale diversion of monies” by the previous government as reasons for the current resource scarcity.

According to Bloomberg report citing sources, Naidu has apparently requested a substantial portion of the support to be paid from this year’s national budget.

The report further states that, while Modi has “agreed in principle, he government hasn’t yet agreed on the exact amount of the support.”

“There is no other way to face such challenges except by way of financial hand-holding by the central government,” the TDP said in a statement Thursday.

Financial package

  • Raising the fiscal deficit ceiling of 3 percent of state gross domestic product by allowing an additional 0.5 percent of borrowing for the financial year through March 2025. That’s equivalent to about ₹7,000 crore
  • ₹50,000 crore to build the new capital of Amaravati, of which 150 billion rupees are to be allocated in the current fiscal year
  • ₹12,000 crore this fiscal year for the Polavaram irrigation project, and a commitment for more funds going forward
  • ₹15,000 crore over the next five years to clear overdue debt
  • ₹10,000 crore for infrastructure development under the federal government’s 50-year loan scheme

Andhra Pradesh’s government is facing severe financial strain, according to the TDP, with expenses like salaries, pensions and debt servicing exceeding the state’s revenue. The state’s public debt was 33 percent of its GDP at the end of the 2024 fiscal year, up from 31 percent four years ago, official data show.

Also Read: Will PM fulfil his promise of giving special status to Andhra, Bihar, asks Congress

Special category status and allies

With the Modi-led BJP not being able to secure the simple majority of 272 seats in the recently concluded general elections, the ruling party is now dependent on the NDA allies—Andhra Pradesh’s TDP and Bihar’s Nitish Kumar-led JD (U).

The BJP in its poll campaigns during the run-up to the 2014 General Elections promised that the SCS would be accorded to Andhra Pradesh if voted to power.

SCS, which was about additional central funds among others, was promised to Andhra Pradesh by the then central Congress government in the wake of the southern state’s bifurcation and the creation of Telangana in 2014.

However, it was shelved for various reasons including enhancement of devolution of funds to the states from 30 percent to 41 percent.

Replying to a query in the parliament, Finance Minister Nirmala Sitharama in June 2019 said there was no proposal under consideration of the Central Government for grant of Special Category Status though there were requests from Odisha, Rajasthan, Bihar, Telangana, Jharkhand, Chhattisgarh and Andhra Pradesh.

According to other reports, Bihar Chief Minister Nitish Kumar is also demanding a special financial aid package for the state.

(Edited by Sumavarsha Kandula, with inputs from PTI and a Bloomberg report)

(South First is now on WhatsApp and Telegram)