Amaravati: Andhra Pradesh Government has decided to put on hold the Amaravati capital city expansion works due to a lack of funds.

The Jagan Mohan Reddy-led government’s white paper on state finances cited a total outstanding debt of Rs 2,58,000 crore. This includes other borrowings, other dues, other liabilities that amounts to Rs 3,62,375 crore. The government is now paying around Rs 20,000 crore per month as interest amount to the outstanding debts.

The previous government under Chandrababu Naidu assessed the requirement for the new capital city of Amaravati at over Rs 2,00,000 crore. The entire amount, however, spent over the five year period was just a miniscule portion of the estimated amount.

A non-convertible debenture issuance was made by the APCRDA (Andhra Pradesh Capital Region Development Authority), a state-owned entity established for the purpose of capital city development at a very high fixed interest rate of 10.32%.

AP Finance Minister Buggana Rajendranadh Reddy said during the release of the White Paper “We will consider the capital city construction works when our government will be able to afford Rs 32 crore/kilometre of road. We cannot go further on the capital city works, ignoring priority sectors like education, health” he added.

Jagan Reddy’s government is now focusing on Navaratnalu (nine assurances were given in their party's election manifesto). For this, the government has to allocate a huge amount of funds in the next five years. Hence, CM Jagan has put the works on low priority.

Officials have already been instructed to put a halt on all works that haven't been started yet and no new construction will be undertaken.

The government’s decision comes as a setback to thousands of farmers, who had given their lands for the construction of the capital city. This is also a jolt to the state's real estate sector.