Who will repay loans taken for Hyderabad development?

HYDERABAD: The bifurcation process is getting uglier. Seemandhra leaders claim that the fiscal burden that would be imposed on them once the division takes place would be unfair since most of the loans that were taken by the state government from various agencies were used for the betterment of the Greater Hyderabad region.

According to the note forwarded by the finance department to the Group of Ministers, since the formation of Andhra Pradesh in 1956, the state has taken a loan of Rs 1,79,637 crore from various agencies like World Bank, Japan International Cooperation Agency (JICA), Asian Development Bank (ADB), Power Finance Corporation, Rural Electrification Corporation Limited and Department for International Development (UK) by pledging its assets. This works out to Rs 21,000 per person.

During the division of the state, as per the guidelines prepared under the States Reorganization formula, public debt has to be shared between the two states on the basis of population. The finance department note says the population of the state as per the 2011 census is 8.46 crore. Of this, 4.96 crore people are from the Seemandhra region and 3.51 crore from Telangana.

Basing on this population figures, the loan burden on the Seemandhra region would amount to Rs 1,04,886 crore while that of Telangana would be Rs 74,751 crore after the bifurcation. However, the finance department, headed by Seemandhra leader Anam Ramnarayan Reddy, claims that most of the money raised by the AP government was spent on development of infrastructure in Hyderabad city and its surroundings that falls under the HMDA limits.

"For example, the Hyderabad drinking water supply scheme from which the state government raised more than Rs 4,500 crore loans for Krishna phase I, II and for the ongoing phase III. Similarly, sewerage schemes of Hyderabad city got Rs 2,400 crore loans. And another Rs 5,000 crore was raised for construction of flyovers, improvement of civic infrastructure, underground electricity cabling works and beautification projects in the Greater Hyderabad region," said an official of the finance department.

The detailed report on loans and assets also made it clear that districts like Srikakulam, Vizainagaram, Nellore, Prakasam, Adilabad and Karimnagar did not get developmental works worth even one percent of the loan amount that was sanctioned for Hyderabad, Ranga Reddy, Medak and Nalgonda.

"The Manjeera water supply scheme, being funded under JNNURM, Hussain Sagar lake cleaning project also benefited Hyderabad city for which large amounts of loans were raised," claimed a senior official in the municipal administration department.

The interest on the loans has now shot up to Rs 15,298 crore. After bifurcation, the new state of Telangana and residuary Andhra Pradesh will have to make the necessary financial arrangements to repay the debt apart from payment of salaries and pensions. Even release of pledged assets will become a major controversy as most of them belong to irrigation, electricity and water works departments and are under mortgage to international and national finance institutions.