Hyderabad: The Cabinet Note on state bifurcation has not only put the onus of deciding the location of a new capital of the residuary state of Andhra Pradesh on the state government, but has also burdened the latter with the costs that will accrue.
Union home minister Sushilkumar Shinde had announced that the government of the residuary state would decide the location of the new capital. The Cabinet note now indicates that the primary responsibility of building the new capital also lies with the state government.
The note said: “GoM shall determine the special financial disbursements that may be required from the Centre in addition to the revenues that would be available with the residuary state of AP for the formation of the new capital.”
According to a study by a team from IIT-Delhi and city-based Vaada Foundation, a new capital could cost a minimum Rs 2.5 lakh crore. Given the financial tightrope that the current state government walks, financial experts say it will be extremely difficult for the residuary state to bear the cost.
The total capital expenditure of the unified state in the 2013-14 budget is Rs 21,278 crore, of which a lion’s share will go to the Jalayagnam irrigation projects. The capital expenditure is 16 per cent of the total revenue receipts of Rs 1.26 lakh crore.
The government was notorious for falling short of capital expenditure estimates at the end of each financial year. Moreover, revenue receipts are expected to fall heavily for the residuary state because Hyderabad, the real growth engine of the state’s economy, will remain with Telangana.
Even assuming that the Centre agrees to the suggestion of the Cabinet note that provision may be made in the Telangana Bill to determine adequate funds towards the cost of the construction of the new capital, the fund flow is expected to be low.