Update on India’s States: December 18, 2015


Ten states have signed on to the Center’s plan to rescue state power utilities; Andhra Pradesh faces a severe fiscal shortfall; the Supreme Court upholds Haryana’s restrictions on who can run for office; Karnataka will allow start-ups to bid on government contracts; Maharashtra is pushing its cities to make it quicker and easier to get the approvals for major construction; Uttar Pradesh is exploring using solar power to fuel mini-grids in urban areas; Siemens secures contract to rehab West Bengal’s power transmission grid.

Center-State relations

Ten states, including Gujarat, Andhra Pradesh, and Rajasthan, have formally joined the Ujwal Discom Assurance Yojana (UDAY), the central government’s plan to revive debt-laden state-owned power distribution companies (discoms). Source: Economic Times

Chief Economic Adviser Arvind Subramanian’s Committee on the Goods and Services Tax (GST) has suggested that most goods be taxed at 17-18 percent, with a low rate of 12 percent on merit goods and a 40 percent “sin tax” on goods such as tobacco and soda. Source: Economic Times, Business Standard

The Union ministers for railways, power, and industry, among others, will now sit on an expanded Inter-State Council along with chief ministers from every state. The Council’s Standing Committee will be chaired by Home Minister Rajnath Singh and will now be able to consult private experts. Source: Economic Times

The Ministry of Urban Development aims to complete the process of disbursing the first round of central funding under the Atal Mission for Rejuvenation and Urban Transformation (Amrut) by the end of this month. The Amrut Apex Committee will consider the annual action plans of Maharashtra, Uttar Pradesh, and Karnataka, among other states, by December 15. Source: Hindu Business Line

The Andhra Pradesh Finance Department was forced to halt all outflows except emergency expenditures until the arrival of the state’s latest loan of $230 million. Andhra Pradesh has borrowed $1.62 billion during the current fiscal year. Source: The Hindu

The five-day winter session of the Andhra Pradesh Legislature will begin December 17. Debate is likely to focus on the Central government’s failure to grant special category status to Andhra Pradesh and on the government’s response to the ongoing drought in the state. Source: The Hindu

An expert committee found that it will cost an estimated $4.17 billion to build Amaravati, the new capital of Andhra Pradesh. The figure includes $1.85 billion for the capital zone and $2.3 billion for the surrounding city. Source: Economic Times

The central government will provide a special package of $53 million for development of seven backward districts in Andhra Pradesh’s Rayalseema and North Coastal regions. Source: Economic Times

Delhi recorded the highest average per capita income of any state in the country during financial year 2014-15. The average income of $3,700 represented a 13.5 percent increase over the previous year. Source: Business Standard

The Delhi government is likely to create designated bus lanes in Delhi’s wider streets during its 15-day experiment with alternately banning odd and even numbered license plates from the roads. Although private cars using the designated lanes will face a penalty, the success of the plan depends on whether private operators are able to deploy a promised 6,000 new buses to the city’s streets. The current public fleet numbers only 5,000 vehicles. Source: Economic Times

The New Delhi Municipal Council has submitted a proposal for renovating central Delhi as part of the centrally-funded Smart City project. The $275 million proposal includes facilities for 24×7 power and water supply, multilevel car parking, and digitization of schools and hospitals. Source: Economic Times


An economic slowdown, the increasing availability of cheap products from China, higher production costs, and a ban on expansion in heavily polluted areas have taken a toll on the chemical industry in Gujarat. Over 350 chemical manufacturing plants in Ahmedabad, Ankleshwar, and Vapi have closed. Source: Times of India

The Gujarat High Court dealt a severe setback to the state’s Dholera Special Investment Region, staying all work until it has resolved issues related to land acquisition. Source: Hindu Business Line



Karnataka plans to become the first state in the country to allow start-ups to pitch for local government contracts, a move that could bring down the cost of procurement for government agencies and increase their access to new technologies. The move will allow a collective of new enterprises across technology, manufacturing, and services to bid directly on government contracts. Source: Business Standard

The election campaign for the Karnataka Legislative Council began on December 12, and both the ruling Congress Party and opposition Bharatiya Janata Party (BJP) are facing challenges from within their ranks. Prominent former members of both parties are running as independents. Source: The Hindu

The Congress and the BJP are apparently united in their efforts to disempower the Karnataka Lokayukta (ombudsman), arguably the strongest anti-corruption bureau in the country. With the bureau’s leadership removed on corruption charges, the Congress-led state government is planning an amended bill that would take away at least half the Lokayukta’s powers, including the power to investigate grievances against officials and public servants. Source: Economic Times

Karnataka’s Energy Department will provide sixty million 9-watt LED bulbs at a cost of $1.75 each ($2.85 below the market price). Source: The Hindu


The municipal corporations of Navi Mumbai, Pune, and Nashik – all controlled by opposition parties – are objecting to the state government’s plans to build Smart Cities in the three municipal areas. The corporations are concerned that the creation of new urban areas would dilute their autonomy and create new financial burdens. Source: Business Standard

The Maharashtra government created a task force, chaired by Union Minister of State for Finance Jayant Sinha, charged with building an International Financial Service Center (IFSC) in suburban Mumbai. Source: Economic Times

The Maharashtra Legislative Assembly was adjourned for the third successive day after the opposition Congress Party and Nationalist Congress Party repeatedly disrupted the proceedings over their demand for complete loan waiver for farmers affected by drought. Source: Economic Times

The government of Maharashtra has asked state municipal corporations to cut the number of approvals needed for a project in the realty sector to 70 (from the current 200), to cut the number of clearances needed for an industrial unit to 37 (from 76), and to consider a reduction in the time it takes to receive all clearances to no more than a month. Source: Business Standard


Rajasthan was the first state to submit its Smart City plans to the central government. Development of Udaipur, Kota, and Ajmer as smart cities is expected to cost a total of $617 million. Source: Economic Times

The debt burden of Rajasthan’s three public power distribution companies has fallen by $920 million over the last two years and is expected to sink to $1.46 billion by the end of this year. Source: Economic Times




The Tamil Nadu government has asked the Urban Development Ministry to provide $692 million in special funds to pay for the restoration of areas severely affected by last week’s flooding and torrential rains. The Center has declared the recent floods in Tamil Nadu a ‘calamity of severe nature.’ Source: Economic Times, Economic Times


Based on the first eight months of the year, Telangana chief minister K Chandrasekhar Rao is projecting the state’s growth rate in the current financial year (2015-16) to be 12 percent. Revenues from value added tax (VAT) and sales tax grew by 18 percent. Source: The Hindu, New Indian Express

Ontario, Canada, Premier Kathleen Wynne and a delegation of Canadian business leaders will be touring Hyderabad and Amaravati (in Andhra Pradesh) to explore areas of cooperation. The Ontario delegation is expected to sign a memoranda of understanding with the governments of Andhra Pradesh and Telangana on various issues such as sustainable development, urban infrastructure, smart cities, renewable energy, environmental technologies, and energy efficiency. Source: New Indian Express


Uttar Pradesh has drafted a policy governing the use of solar mini-grids to provide electricity to rural areas while reducing the burden on the main grid. Both public sector firms and private companies will be able to establish mini-grid projects ranging in size from 10 kilowatts (KW) to 500 KW. Source: Business Standard

A boom in e-commerce in West Bengal prompted industrial and logistics companies to buy 1.5 million square feet of warehousing space in West Bengal in 2015, compared to 1 million in 2014. The largest deal was e-retailer Flipkart, which bought 150,000 square feet. Source: Economic Times

German firm Siemens won a $15 million contract to build a new power transmission system for West Bengal’s state-run distribution company, the West Bengal State Electricity Commission Company. Source: Business Standard

Bonus Round

India’s Supreme Court upheld a controversial Haryana state law which sets minimum educational criteria for candidates for local office, and requires that they be debt-free and possess a toilet in their homes. Opponents of the law are concerned that it effectively sets income criteria for office that exclude disenfranchised sections of society. Source: Indian Express

To subscribe to the weekly newsletter, click here.


Leave a Reply

Your email address will not be published. Required fields are marked *