Andhra Pradesh government to issue municipal bonds to raise fund for new capital

HYDERABAD: Andhra Pradesh government will soon issue municipal bonds named ' Build Andhra' to raise funds for development of the new state capital.

The new capital will be developed in the first phase, in an extent of 25,000 acres land between Vijayawada and Guntur cities, though the exact location is yet to be specified.

The state government plans to go in for land pooling to get the required land for the capital's development.

While the Centre is expected to provide financial assistance to the state, as per A P Reorganisation Act 2014, the state government for the first time has announced to issue bonds to raise funds for the capital.

"We will issue municipal bonds in the name 'Build Andhra'. We are working on modalities and will come out with details soon," Rajya Sabha member Y Satyanarayana Chowdary, who is also heading the state's Resource Management Committee, told reporters here today.

Finance Minister Yanamala Ramakrishnudu, Chowdary and State Planning Board vice-chairman Kutumba Rao discussed the proposed bonds issue with the Reserve Bank Governor Raghuram Rajan during a meeting at the Secretariat here this afternoon.

"We have informed the RBI Governor about the bonds proposal and have also informed him that a Special Purpose Vehicle is being formed for the new capital's development. We sought the RBI and the banks' co-operation as their financial support is essential for the capital's development," the Finance Minister said.

"Rajan assured us of RBI's co-operation and we are thankful to him for that," Yanamala added.

The state government team also discussed the need for strengthening the Depositors' Protection Act by bringing in necessary amendments.

"We told him (Rajan) that we are ready to amend the Act to strengthen it to protect the interests of small-time borrowers from NBFCs and micro-finance institutions," Yanamala said.

The Finance Minister said the RBI Governor appreciated the Comprehensive Financial Management System being implemented in the state Finance Department.

Rajan noted that the e-payments system being implemented by the AP government was a model in the entire country, the minister added.