Amaravati Got Funding Or Loan? Does It Matter?

India’s Finance Minister, Nirmala Sitharaman, other day announced that ₹15,000 crores will be provided for the development of Amaravati, the new capital of Andhra Pradesh. However, this announcement has led to widespread allegations from opposition parties as they stated that BJP cheated Andhra Pradesh and Chandrababu Naidu big time.

In fact, Sitharaman clarified that the money will be lent through the World Bank, and the Andhra Pradesh government is expected to provide a matching grant. This means that for every rupee borrowed, the state must contribute an additional amount from its own resources. Given the state’s current financial challenges, it is unclear whether it can afford to allocate such a large sum as a matching grant. But she assured that Centre might look into that as well.

Of course, states should secure foreign loans strictly through the central government and be prepared to contribute 20% to 30% as a matching grant. The funding structure also implies that the responsibility of repaying the loan, along with interest, lies with the state government. However, at this given moment, it is not important if the state of AP gets funding or a loan, it is important that capital must be built.

The development of Amaravati is crucial for Andhra Pradesh’s growth, and the method of financing this project might have implications, but if we put development first, surely something is better than nothing. The previous regime didn’t even manage to get a single paisa, forget funding, or a loan.