Cash crunch hits roads and bridges development projects in Andhra

The state government had earmarked Rs 6,400 crore for roads and bridges development projects, taken up with loan assistance from the New Development Bank.
Andhra Pradesh Chief Minister Jagan Mohan Reddy at his office smiling
Andhra Pradesh Chief Minister Jagan Mohan Reddy at his office smiling
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A financial crunch faced by the Andhra Pradesh government has impeded the progress of Rs 6,400 crore in roads and bridges development projects, taken up with loan assistance from the New Development Bank. The slow pace of progress hasn't exactly gone down well with the Andhra Pradesh Chief Minister YS Jagan Mohan Reddy, who urged the Finance Department to step up efforts in this regard.

The NDB, the centre's Department of Economic Affairs and the AP government signed a tripartite agreement in January 2021 for the AP Roads and Bridges Reconstruction Project and the AP Mandal and Rural Connectivity Improvement Project, costing Rs 3,200 crore each. A year later, the two projects are facing a major roadblock as Andhra's Finance Department has no money on hand to fulfil the state's obligation, a top official said.

With official sources indicating that there were indications of NDB reconsidering the loan, the Chief Minister pulled up Finance Department officials and directed them to clear all hurdles for the projects forthwith and end the impasse. Since these are major externally-aided projects, the Union government has also been keeping a close eye and pushing the state to step up things, but to no avail, according to sources.

The state Roads and Buildings Department planned to widen 3,104 km of roads and construct/ reconstruct 479 bridges in all 13 districts. The two projects are intended to improve mobility and connectivity to the socio-economic centres, enhance transport efficiency, improve road safety and riding quality and provide all-weather accessibility for the state's road users.

Of the Rs 6,400 crore, the state government has to bear Rs 1,920 crore while the balance comes as loan from NDB. The Roads and Bridges Department, which is the executing agency for the projects, has enlisted 124 works in the first phase at a cost of Rs 3,013.86 crore and awarded the contracts more than nine months ago. However, there has been no progress in the works as, initially, the contractors were reluctant to go ahead, fearing non-payment of bills by the government.

The R and B Department prevailed upon the Chief Minister for a separate bank account for the projects so that the payments to contractors could be made directly without any hitch. However, the Finance Department asked the NDB to first release the loan amount up-front without insisting on the state share. The NDB not only rejected the plea but also stalled release of the loan, pending the state share.

"This has jeopardised the projects for a year now. We have lost over a year and unless we pay our share of money (into the separate account), we will not get any releases from the NDB," a top official told PTI. These facts were recorded at least in four high-level meetings chaired by the Chief Minister but the Finance Department reportedly did not act.

When the issue again came up for discussion at the weekly meeting on finance issues the other day, an upset Jagan is learnt to have pulled up the Finance Department heads and set Tuesday (January 18) as the deadline to sort things out.

"If roads and bridges are not done, how do we face the people," the Chief Minister asked those in the Finance department, who pleaded that the coffers were empty. The R and B Department has lined up 120 works under Phase-2 of the projects at a cost of Rs 3,386.14 crore but with the first phase on a bumpy road, the second's future hangs in the balance.

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