Substantial debt relief for AP next fiscal: Ramesh

The Andhra Pradesh government is expected to receive a substantial debt relief package from the Centre in the next financial year.

Jairam Ramesh, incharge of AICC's economic affairs wing and a Rajya Sabha member-in-waiting also said that the state government needed to focus on the automobile and textile sectors for stimulating industrial development in Andhra Pradesh.

Talking to Business Standard here on Friday, Jairam Ramesh observed that four or five big players like Volkswagen AG of Germany had to come to the state to encourage the down stream industry to grow all over.

"Volkswagen has already shown interest in setting up a plant in Andhra Pradesh. So we should look forward to some more such projects to materialise," he said.

According to him, the central government would announce a comprehensive debt relief package for states like Andhra Pradesh in the coming Budget. When asked about the features of the package, he said that it would be known only after the finance commission submits its report.

In fact the United Progressive Alliance government's Common Minimum Programme promises to bring debt relief package for states.

According to Jairam, reducing interest burden on past borrowings would be one of the important features of the future package.

"Andhra Pradesh will receive a substantial debt relief in 2005-06. It may not be the case during the current financial year," he said.

Andhra Pradesh is reeling under a total debt burden of Rs 57,000 crore as of March 31, 2004, and has to pay close to Rs 9,000 crore in servicing the debt.

He lauded former chief minister Jalagam Vengalarao's efforts in bringing industries to the state in 1970s.

"Earlier, the public sector companies like IDPL, BHEL gave impetus to industrial growth in the state. Now the private sector needs to don the mantle," he said.

The automobile industry has great potential for growth in the state, Ramesh observed and said that the state should also make best use of its traditional strength in the textile industry.

Ramesh , who is expected to play an important role in bringing investments to the state, has categorically said that attracting new industries is not all about providing incentives.

"In fact, we should stop worrying about incentives. What is important is to be able to give a sense of confidence to businessmen about the government's willingness to help them. They just need psychological support," he said.

Terming chief minister Y S Rajasekhara Reddy's Mumbai visit as a step in this direction, Ramesh felt that the government should try and clear the sense of uncertainty that prevailed in the minds of industrialists after the change of government in the state.

On financial support from institutions for various projects undertaken by the state government, he sounded optimistic about the availability of institutional investments.