In the run-up to the Union budget, the Telugu Desam Party and the YSR Congress Party took their fight to the streets of Delhi. Chief Minister N. Chandrababu Naidu met Union Home Minister Amit Shah for the second time after the elections, followed by his internal meetings with the TDP's 16 Lok Sabha MPs. On July 22, a day before the budget, the MPs once again met in Delhi and mulled over the wish list that could propel the state's economic engine.
"The focus was on Amaravati and the Polavaram and Rayalaseema irrigation projects and the new educational institutions," said Nandyal TDP MP Byreddy Shabari. Naidu wanted immediate results in the form of development activities to strengthen the argument that Andhra Pradesh suffered under the Jagan Mohan Reddy regime and was now in repair mode.
The YSRCP was trying to undermine the TDP’s efforts. It pitched for special category status for Andhra Pradesh, a demand that led to the TDP walking out of the National Democratic Alliance in 2018. Naidu is no longer keen on the issue. On July 24, Jagan sat on a dharna in Delhi demanding president's rule in the state, alleging a breakdown of law and order. He was also trying to send a message that without the special category status, everything else that was given in the budget was just optics.
On budget day, however, the Narendra Modi government, which relies on the TDP's support, gave prime consideration to Andhra Pradesh. “Our government has made concerted efforts to fulfil the commitments in the Andhra Pradesh Reorganisation Act," said Finance Minister Nirmala Sitharaman while presenting the budget. She has promised to facilitate special financial support to the tune of Rs 15,000 crore through multilateral development agencies for Amaravati, Naidu's pet project. The Union government also committed to the early completion of the Polavaram irrigation project, offering financial support. Also mentioned in the budget was support for the Visakhapatnam-Chennai and the Hyderabad-Bengaluru industrial corridors. Naidu and the TDP also managed to secure grants for backward regions in the state, such as Rayalaseema, Prakasham and north coastal Andhra.
Though the Andhra Pradesh government expected an announcement regarding a Bharat Petroleum Corporation Limited (BPCL) refinery with an investment of Rs 60,000 crore, there was no mention of the project in the budget. A BPCL delegation had visited the state and held discussions with Naidu. The TDP later clarified that the refinery announcement did not find a place in the budget because the BPCL was a corporation. It said a separate announcement about the project would be made soon.
Notwithstanding the favoured treatment from Sitharaman, the TDP’s wish list remains long. It wants assistance to develop road infrastructure, including a highway linking Amaravati and Anantapur, a hike in the Reserve Bank’s FRBM (fiscal responsibility and budget management) limit to avail more loans and a railway zone for Visakhapatnam.
"We will need the help of the Central government to give a fillip to the economy," said TDP spokesperson N. Vijay Kumar. “Amaravati is a revenue-generating project. The indicators of economic activity are steel and cement, and they will be widely used," he said. "The state government has already allotted land for 48 Central government institutions. If the state government is able to spend Rs 30,000 crore to Rs 40,000 crore in four years, Amaravati will become self-driven. The private players in Amaravati will spend their money and will not entirely depend on the government."
Kumar said the debt accumulated over the years was a major problem. Andhra Pradesh has debt amounting to more than Rs 4.85 lakh crore, and the TDP blamed the YSRCP government for taking additional loans to fund its welfare programmes. It said the previous government spent more than Rs 1.75 lakh crore on various welfare schemes.
In a white paper, Naidu assailed the YSRCP government for accumulating huge losses and alleged that it was responsible for the loss of Rs 19,137 crore to the exchequer. On the Amaravati capital project, he said the YSRCP government blocked a Central government grant of Rs 1,000 crore. On Polavaram, he said Rs 3,300 crore of Central money was diverted. G. Srikanth Reddy, a former MLA from the YSRCP, refuted the charges and blamed Naidu for emptying the state coffers during his term and failing to provide welfare to people or bring any development.
The new government, meanwhile, is struggling to finance the welfare schemes it promised in its election manifesto, which include a pension of Rs 4,000 for the elderly, an annual grant of Rs 15,000 for school-going children and free bus rides for women.
Revenue Minister A. Satya Prasad said Naidu was a wealth creator and would improve the growth rate. “We have to spend Rs 33,000 crore for pensions and we need to give free bus rides. Though there are problems like the huge debt, we can see that more investors are coming to the state, and this will change everything."
Economists and experts are, however, sceptical and warn that the fiscal deficit remains a concern. Chittedi Krishna Reddy of the University of Hyderabad said Andhra Pradesh's growth was steady, but it fell behind neighbouring states with more diverse and innovative economies.
"Telangana's growth rates were slightly higher, owing to its robust IT sector and Hyderabad's economic dynamism," said Reddy. "Andhra Pradesh's fiscal deficit remains a concern because of excessive public spending on welfare programmes and subsidies."
Reddy said projects like Amaravati and the ongoing welfare programmes would require immediate funding up to Rs 1,00,000 crore. “The new administration will have to effectively mobilise resources by combining state revenues, Central assistance, public-private partnerships, borrowing, and also by attracting foreign investment. The difficulty will be in finding a balance between these expenses and sustainable fiscal management to prevent too much debt."