'Amaravati bonds' kicks up a political row in AP

The Amaravati Bonds, meant for construction of a new capital for the residual state of Andhra Pradesh kicked up a political row with the opposition YSR Congress blaming the government for dragging the state into a debt trap.

The government which was forced to gather funds on its own for the development of Amaravati has recently declared that the Bonds were oversubscribed because of its assured lucrative returns.

However, YS Jaganmohan Reddy who was on a statewide Padayatra said that the Chandrababu Naidu government is pushing Andhra Pradesh into an abyss of debt.

“The publicity on oversubscription of Amaravati bonds is a farce as the rate of interest, need and terms of the issue have been shady and questionable,” he said in a statement.

Party senior leader and Public Accounts Committee (PAC) chairman Buggana Rajendernath Reddy says that lenient clause such as paying 10.75% interests rate to be paid quarterly will prove fatal.

“Nara Lokesh Naidu’s boasting of oversubscription is ridiculous and one should remember that bonds are nothing but raising loans which means increasing the debt burden of the State,” Reddy said addressing media. He further said the state government should have exhausted all other avenues before going for the Bond issue.

Opposition parties in the state argue that raising bonds is nothing but raising loans and for a state, already in revenue deficit the payment of bonds will be nothing but a huge burden.
State Planning Commission allays fears

However, State Planning Commission Vice Chairman C Kutumba Rao allayed fears of the opposition and said that raising funds through Amaravati Bonds is beneficial to cash-strapped AP. Addressing media in Amaravati, Kutumba Rao said the Capital Region Development Authority (CRDA) has no other way to garner funds with the central government washing its hands off the construction of the state capital.

“With the centre giving a meagre Rs 1,500 crore and the World Bank delaying sanction of loans due to letters by YSRCP, going for bonds is the only way left,” he said.

He said interest rate of bonds was based on a rating of experts.

“As we got A Plus rating, we are supposed to pay 10.48% interest, but we will pay 10.32% interest,” he added. Giving reasons, Rao said that even Telangana government is paying such interest rates for their pet projects such as Mission Bhagiratha.