Various infrastructures firms are looking at setbacks as the YSR Congress government led by YS Jagan Mohan Reddy has decided to cancel most of the Rs 50,000 crore worth irrigation contracts in Andhra Pradesh, the Economic Times reports.
Andhra Pradesh chief secretary LV Subrahmanyam on Wednesday (29 May) issued orders to cancel the projects awarded before 1 April. He said that many engineering works were sanctioned due to the relaxation of the Fiscal Responsibility and Budget Management (FRMB) norms and caused a huge burden on the state exchequer.
He pointed out the need for a “thorough review of ongoing projects as priorities have not been followed.” While the government has decided to cancel the works sanctioned before 1 April, they have not grounded them.
Both private and public banks would now see a significant portion of their loans turn into non-performing assets (NPAs) and are searching for a solution to the problem, including initiating insolvency proceedings, sources close to the developments said.
“Management of these construction firms, whose projects are facing the threat of cancellation, were with the bankers on Friday, some convincing bankers about the possibility of retaining the contracts while others seeking temporary relaxations,” a senior counsel from a leading public sector bank said.