Andhra Pradesh's Chandrababu Naidu govt to clear ₹7,500 crore subsidy dues

New Delhi: In a bid to woo private investments to Andhra Pradesh, chief minister N Chandrababu Naidu is set to disburse outstanding subsidies worth ₹7,500 cr over the next three months with a little help from the Centre.

The state government will clear the outstanding subsidies in tranches - the first tranche of ₹2,000 crore will be cleared in October and the remaining by December end. The subsidies are an important part of industrial policy of the state and are offered to companies as they invest in projects. The state governments clear them gradually through provisions in the Budget. However, in case of AP, the outstanding subsidies have mounted over the last 7 years and the state has had to take special measures to clear them. A senior state government official, who did not wish to be identified, told ET, "Clearing outstanding subsidies is essential to improve investor sentiment. This has a ripple effect - companies realise that the state government is serious about paying them the promised subsidies."

The state has formed a corporation AP State Special Projects Development Corporation Ltd that will raise the money to clear outstanding subsidies. For the first tranche, the corporation will take a loan of ₹2,000 crore from HUDCO, a public sector undertaking under the ministry of housing and urban affairs.


Since the corporation will be taking the loan, the cash-strapped Naidu government will be able to fulfill its commitment without affecting their fiscal headroom. Andhra Pradesh government is holding its first investor summit on November 14 and 15 in Visakhapatnam and will disburse the first tranche before this. Highly-placed sources said the state government is in the process of drawing up a list of investors whose outstanding dues will be cleared. Employment-generating MSMEs will be prioritised.