The Central government has assured the Andhra Pradesh government that steps are underway to release the ₹ 1,000 crore special financial support assured to the successor State for creation of essential facilities in the new capital Amaravati.

The Centre had already released ₹ 1,500 crore of the ₹ 2,500 crore assured, the Department of Expenditure of the Union Finance Ministry said. The remaining amount would be released in three equal instalments of ₹ 333 crore each. “Proposal for release of ₹ 333 crore to meet the immediate expenditure on the ongoing works for the year 2017-18 is under process,” the Ministry said.

The Union Ministry gave the information on the release of funds to successor State of Andhra Pradesh during a high-level meeting convened by the Union Home Ministry last month to review the status of implementation of the provisions under the AP Reorganisation Act, 2014.

According to the minutes of the meeting, the AP government has complained to the Union government that it had not received the grants for backward areas in 2017-18 and 2018-19.

The Department of Expenditure, however, asserted that funds were not released to the State because of the “limited utilisation by the State Government”. Responding to the concerns raised on bridging the resource gap, the Ministry said release of only ₹ 138 crore was pending out of the resource gap of ₹ 4,117.89 crore for the year 2014-15.

An amount of ₹ 3,644 crore was released as post devolution revenue deficit grant during the year 2018-19 to the State (in addition to ₹ 15,969 crore released during 2015-18), the Ministry said. On the assurance of examining the feasibility of establishing greenfield oil refinery and petrochemical complex in Kakinada, the Petroleum Ministry recalled that AP Government had emphasised that the viability gap funding in respect of the petrochemical complex at Kakinada be borne by the Central government as was done in Assam as special case. The representative of the Petroleum Ministry informed that the viability gap funding in respect of Rajasthan and Odisha was borne by the respective State governments. He said that the Ministry had taken a considered view that the VGF would not be provided in such projects by the Central government and the State needed to reconsider its views.