Posted on Friday, February 05, 2010 - 07:46 am:

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HYDERABAD: Faced with an acute financial crisis, the Rosaiah government is all set to sink predecessor Y S Rajasekhara Reddy�s flagship

Jalayagnam programme designed to leapfrog rural Andhra Pradesh to prosperity.

Highly-placed sources say that the state government is ready to negotiate with the contractors of new Jalayagnam (irrigation) projects to either cancel or postpone them indefinitely. Things have reached such a pass that the government has to prioritise the projects and push the rest of them into cold storage, the sources said.

�Work worth Rs 1 lakh crore has already been allocated to the contractors. Given the financial crunch, we have no option but to cancel many of the works through negotiations,� the sources said. The government is expected to start negotiations with them as the contracts cannot be legally cancelled or postponed unilaterally, the sources added.

In fact, unless the central government comes to the state�s rescue, major projects like Polavaram, Dummugudem, Kantanapalli and Pranahita-Chevella will not see the light of day, the sources revealed. �When there is uncertainty with the ongoing projects itself, where is the question of the new ones being taken up,� said one official.

All the contractors have been given 10 per cent mobilisation advance and thegovernment has to forego the amount if it annuls the contracts. As a compromise, the contractors have to be accommodated in some other work and this needs a great deal of persuasion, the sources said.

Even while negotiating with the contractors on the ongoing projects, the government has decided that no new work will be started under the Jalayagnam scheme unless the pending bills are cleared. For example, in the Rayalaseema region alone, bills worth Rs 1000 crore have been pending since June 2009. The financial crisis began in August 2008 with revenues falling drastically. And there are no signs of improvement in the near future,� the sources said.

According to them, the compounded annual average growth rate of revenues was 24.4 per cent between 2003-04 and August 2008. After the growth rate started falling, it is now fluctuating between 5 per cent and 6 per cent. �With this low growth rate, meeting the huge bills of Jalayagnam is next to impossible,� the sources added.

The ambitious Jalayagnam was launched when the revenues were growing at 20 per cent and the expenditure was growing just about 16 per cent.� There was a surplus to the tune of 4 per cent. Jalayagnam was launched by generating some more funds with assistance from external sources. The situation has turned topsy turvy now,� the sources said.

In fact, due to late chief minister Y S Rajasekhar Reddy�s personal interest, the Rayalaseema projects reached the final stages of completion. �An amount of Rs 10,000 crore is sufficient to complete all the Rayalaseema projects like Potireddypadu, Telugu Ganga, Banakacherla and Gandikota,� the sources said.

Completing all the projects at one go is all the more important because these projects are interlinked. Similarly, the Telangana projects, which have not seen that much progress, need more than Rs 80,000 crore for completion at the current rates.

At the present rate of allocation of funds, no project could be completed in any region, the sources admitted.
But, given the regional tension in the state, the Rayalaseema projects, even though they are in the final stages of completion, are unlikely to get the attention of the government as they did when YSR was alive

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