Fund crunch hits AP

Amaravati: Water Resources Department is exploring ways to secure loans from financial institutions for execution of ongoing irrigation projects. As the state government has decided to complete 28 priority irrigation projects within stipulated time schedule, the Water Resources Department is exploring for funds through AP Water Resources Development Corporation (APWRDC) to secure funds from banks and other financial institutions. Around 8 priority projects have already been completed and ready for inauguration.  

State Finance department on Tuesday gave permission to the AP Water Resources Development Corporation to take loan for accelerating the progress of ongoing irrigation projects through APWRDC for an amount of Rs.2,000 crores.

As the Fiscal Responsibility and Budget Management (FRBM) Act is not allowing the state government to go for more borrowings, it is encouraging various government corporations to secure loans from financial institutions on their own. The state government will provide guarantee for the loans.

The APWRDC is trying to secure at least Rs 10,000 crore as loan from banks through a guarantee from state government. The Managing Director of  APWRDC submitted to the state government that the Engineer-in-Chief of Water Resources Department had furnished the requirement of funds for ongoing irrigation projects for an amount of Rs 10,796.53 crore.

The corporation has decided to raise a total loan of Rs 3,000 crore – Rs 2,000 crore from Vijaya Bank  and Rs 1,000 crore from Punjab & Sind Bank with an interest rate of 7.90 per cent per annum. The State government has amended Act 8 of 2004 to enable the APWRDC to take a maximum loan of Rs 3,000 crore from the open market or national banks for the ongoing irrigation projects.

The APWRDC further requested the government to accord necessary permission for borrowing additional term loan of Rs 2,000 crore for accelerating the progress of ongoing irrigation projects.

The government has decided to provide unconditional and irrevocable government guarantee for the additional term loan amount of Rs 2000 crore to be taken by the APWRDC from the open market or banks at a rate of 7.90% p.a. interest. The Finance department gave permission on Tuesday to the APWRDC to take the loan amount of Rs 2,000 crore.