Andhra draws up Rs 2,500 cr irrigation plan

Raising funds not a problem: Rajashekhara Reddy.

The Andhra Pradesh government has formulated a Rs 2,500 crore package together with the Life Insurance Corporation of India (LIC) for financing irrigation projects.

The state government is also drawing up a roadmap, which will see the involvement of oil majors like Indian Oil Corporation (IOC) and Reliance Industries, to make the state a major producer of bio-diesel.

Disclosing this in an interview with a select group in the media, Chief Minister, Y S Rajashekhara Reddy said the state would spend between Rs 6,000 crore and Rs 7,000 crore on irrigation projects during the current financial year.

"Raising finances for irrigation projects is not a problem despite the debt burden. Andhra Pradesh has never failed in meeting its payment obligations so far," Reddy said.

"Raising this money will only affect our fiscal deficit and not our revenue deficit. In fact we are looking at ways to reduce the revenue deficit of about Rs 3,000 crore," he said.

The Andhra Pradesh government has drawn up a massive irrigation project investment plan which will see it spend close to Rs 9,000 crore every year on irrigation projects and an estimated Rs 46,000 crore over the next five years.

In another major initiative, the government is planning to make the state the biggest producer of bio-diesel in the country and involve oil majors like Reliance and Indian Oil Corporation (IOC) in this initiative.

"We are planning to bring between 40 and 50 lakh acres of land in seven to eight districts of the state under bio-diesel plantations and ensure that micro-irrigation is used in a big way in these areas. This will change the ecology of the area," Reddy said.

"We plan to involve oil companies in this initiative and expect them to invest so that we are able to cover districts in the Rayalseema, Telangana and Coastal Andhra region," Reddy said.

Bio-diesel plantations typically raise plants like 'jatropha' and 'pongamia' whose extracts are mixed with diesel to produce bio-diesel.

The chief minister also indicated that the government was all set to re-negotiate power purchase agreements (PPAs) with two power companies "" Spectrum Power Generation Ltd and GVK Power "" and the money saved would be used to subsidise power to the farmers.

"The Comptroller and Auditor General has itself pointed out that the state government was paying close to Rs 200 crore more than what was being paid to quasi-state controlled power generating units. We can save this immediately and will in the next two to three weeks re-negotiate these PPAs," he said.

Reddy also said that he was not against farmers paying for power but free power was being given taking into consideration the drought conditions prevalent in the state for the last three years.

"The farmer is not a beggar. He has a lot of self respect. We will revisit the issue of farmers paying for power four years down the line when the effect of all the irrigation projects that have been initiated now, would be felt," he said.

Reddy also that the government was not mulling increasing user charges on other government services to subsidise free power to farmers and the thrust would be on running a more efficient government and reducing wasteful expenditure.