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The state with three capitals has one BIG problem

Investor sentiment has dampened in Andhra Pradesh after many contracts granted by the previous government were cancelled last year. Irrigation projects came to a grinding halt after the new government came to power in May last year

twitter-logoE Kumar Sharma | January 22, 2020 | Updated 09:12 IST
The state with three capitals has one BIG problem
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Andhra Pradesh's state assembly on Monday passed the Capital Region Development Authority Repeal Bill 2020 and the AP Decentralisation and Inclusive Development of all Regions Bill 2020. These bills clear the way for the creation of three different capitals in the state. But that's not what the industrialists are particularly concerned about - their big worry is the stalled projects.

Investor sentiment has dampened in Andhra Pradesh after many contracts granted by the previous government were cancelled last year. Irrigation projects came to a grinding halt after the new government came to power in May last year. Projects in the Amaravati new capital region suffered a similar fate, complain industrialists. Also, sand mining was stopped in a bid to regulate the sector. Many construction contracts were also cancelled over rates at which they were awarded.

As a result industrial operations have come to a near standstill, say industry insiders. Sand was not available for as long as four months, severely impacting construction sector. Big companies such as L&T, NCC and others also took a hit. Even affordable housing project in Amaravati came to a grinding halt. About 40 to 50 construction-related companies were apparently impacted in some way or the other. However, there are no specific details on the exact quantum of impact as much depends on the stage of the project, nature of the project and their share from the region in the overall business.

"The industry is only seeking a more investment enabling environment," says the head honcho of a leading company with investments in Andhra.

In cases of government projects, pending bills are a common issue. Companies have apparently not received payments from the state government for the last six months. One of the companies that Business Today reached out to said the cash-strapped government was yet to clear Rs 700 crore pending dues.

Some projects, however, such as the MLA housing in Amaravati have continued unhindered. Industry representatives grieve that government's sand mining policy also came too late. Delayed monsoon impacted mining work soon after the policy was rolled out. The Polavaram national irrigation project which aimed to interlink several rivers of the state, also suffered a setback last year.Navayuga Engineering, a company involved in the project, received a pre-closure termination notice.

Afterwards, the state government initiated a reverse tendering for this project. Beyond the setbacks in irrigation, construction and power sectors, the state also changed its liquor policy in a bid to ban liqour sale in a phased manner. This has impacted liquor companies.

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