Amaravati: The Centre should make credit available at lower costs for infrastructure building and also for boosting (industrial) manufacturing as prohibitive costs (of debt) have become the major impediment to growth, Andhra Pradesh Chief Minister Y S Jagan Mohan Reddy said on Saturday.
Addressing the 6th Governing Council meet of the NITI Aayog through a video-conference, the AP Chief Minister said the Centre and the states should make a conscious effort to introduce reforms in the industrial sector to overcome the various hurdles and make the country a hub of global manufacturing.
“There are five significant impediments to the growth of the manufacturing sector: Exorbitant cost of funds, high cost of power, delays in land procurement, delay and complexity in grant of statutory clearances and rigid labour laws,” the Chief Minister pointed out.
A thorough study and analysis of the factors that contributed to some countries making good progress in the manufacturing sector was essential, he mooted, adding that the Centre and the states should dive deeper to understand the root cause and introduce reforms to remove the hurdles in the country.
Jagan said AP could not yet gain the required growth momentum in industrialization despite the government’s commitment to provide a business-friendly environment.
“The bifurcation resulted in my state being deprived of a tier-1 city, infrastructure, employment opportunities and financial resources.
Rapid industrialisation of my state is possible if only Special Category Status is accorded,” the Chief Minister maintained.
Talking about infrastructure building, Jagan lamented that even the state governments undertakings were borrowing money from financial institutions like Power Finance Corporation and Rural Electrification Corporation at higher rates of interest of 10-11 per cent per annum.
“With this enormous debt-servicing requirement, our manufacturing units cannot hope to offer products that can compete with products of countries where credit is available at interest rates as low as 2-3 per cent.
So is the case with power, which is available in a few counties at tariffs lower than Rs 3 per unit,” he noted.
On improving physical infrastructure, which he said was a matter of utmost importance for economic growth and poverty alleviation, Jagan wanted the Centre to provide access to low-cost finance to the state governments for developing social infrastructure as well.
“Keeping the socio-economic conditions in mind, we cannot wish away the fact that the government is and will be majorly responsible for providing critical services in the areas of health and education.
Low-cost finance will enable states to provide quality services to citizens at affordable rates,” he said.
The CM wanted the Centre to evolve a national policy making government service in rural areas for a year compulsory for medical and nursing graduates and postgraduates.
Jagan also wanted low-cost credit for creating a market stabilisation fund to procure agricultural produce in the absence of remunerative prices for the farmers.
This would facilitate the state governments to provide necessary support to farmers, he added.
He suggested a few other policy interventions like minimizing the cost of production, ensuring post-harvest technologies and storage and processing facilities for strengthening the agriculture sector and doubling the farmers income.
Noting that AP has identified the potential to generate 33,000 MW of power using reverse-pumping technology, the CM urged the Centre to come up with a national policy to encourage the use of this technology that could mitigate the intermittency associated with renewable energy.
He requested the Centre to facilitate the state power utilities to swap the high cost debt with low-cost long-term credit for the sustainability and survival of the power sector.