Update on India’s States: December 28, 2015


This week: The center is coordinating states’ export efforts and engaging states on the WTO and FTAs; Andhra Pradesh will allow private, and possibly foreign, universities; Tamil Nadu’s election officials are getting reshuffled in advance of Assembly polls; Maharashtra is lowering taxes while facing a budget crunch; West Bengal experiments with “reverse auctions” to provide cheaper power; the center’s bailout program for state power utilities may exceed fiscal deficit limit.

Center-State relations

The central government’s Ujwal Discom Assurance Yojana (UDAY) scheme, which allows states to take over the debt burden of their power distribution companies, may cause states to exceed the fiscal deficit limit for 2015-16 set by the Fiscal Responsibility & Budget Management (FRBM) Act by around 150 basis points. Source: Business Standard

The first meeting of the National Council for Trade Development and Promotion will take place January 8. The Council will discuss states’ export strategies and how to align them with national foreign trade policy, the various free trade agreements that India is currently negotiating, and the World Trade Organisation. Source: Economic Times

The Andhra Pradesh Legislative Assembly passed eight bills in the final days of the winter session. The assembly passed laws allowing for the creation of private universities, regulating private money lenders, adjusting the state value-added tax, and increasing the maximum length of a land lease to 99 years from 33. Source: The Hindu

Andhra Pradesh’s Capital Region Development Authority has released a draft master plan for the new capital and capital region. The capital region will cover more than 3,300 square miles in both Guntur and Krishna districts, while the new capital, Amaravati, will cover 84 square miles. Source: Economic Times

The central Department of Economic Affairs has approved a total of $625 million in loans from the Asian Development Bank (ADB) for the Vizag-Chennai Industrial Corridor. The Andhra Pradesh government will also invest about $215 million. Once the loan negotiations are completed, funding is expected by June 2016. Source: Hindu Business Line

The central government has approved an $85 million project, funded by the Japan International Cooperation Agency, to improve the drinking water supply system in Nellore. Source: The Hindu

Women traveling alone or with young children, VIP’s vehicles, and motorcycles, along with more than 20 other kinds of motorists, will be excluded from Delhi’s ‘odd and even’ vehicle regulation experiment between January 1 and 15. Source: Economic Times

To combat pollution in Delhi, the central government is offering to provide 1 million litres of bio-diesel a day to the Delhi government, as well as technology to convert municipal and other waste into clean natural gas. Source: Economic Times


Gujarat has become the first state in the country to set up public-private partnerships (PPP) for redevelopment of slums in urban areas under a recently launched central program. The Ministry of Housing & Urban Poverty Alleviation approved 30 PPP projects for rehabilitation of slums in Ahmedabd, Surat, Rajkot and Vadodara. Source: Economic Times

The Gujarat government announced that it was raising the minimum support price (MSP) for cotton by nearly 14 percent, to just over $14 per 44-pound bale. The announcement comes shortly after the Bharatiya Janata Party’s (BJP) poor rural performance in recent local body elections, but many farmers criticized the move poorly time, since most crops were sold in October. Source: Business Standard

The central government has completed over 160 miles of fencing on Gujarat’s border with Pakistan, with 47 further miles of fence to be built in the next three years. Between 2012 and 2014 Indian law enforcement detected 34 instances of infiltration and 43 cases of contraband smuggling along Gujarat’s 315-mile international border. Source: Times of India


The Karnataka government has formed a working group that includes private sector industry to advise it on key investments, speedy clearance, and improving the overall industrial climate in the state. The Karnataka Udyog Mitra will be the single point of contact between the state and investors with project proposals worth more than $2.3 million. Source: Economic Times

France, Japan, Sweden, South Korea, the United Kingdom, Italy, and Germany have agreed to be global partners in ‘Invest Karnataka 2016,’ the state’s investment summit, which will be held from February 3 to 5. The state government aims to clear more than $15 billion in projects by the start of the summit. Source: Hindu Business Line, Hindu Business Line

The Karnataka government has constituted the fourth State Finance Commission to review the financial position of the state’s local governments and to make recommendations to the governor on their taxes, duties, and tolls. Source: Hindu Business Line

Voting ended December 27 for 25 seats in the Karnataka Legislative Council. Counting of votes will take place on December 30. Source: Deccan Herald


Seven months into the fiscal year, Maharashtra has earned only 48 percent of projected annual revenue and is facing a growing fiscal deficit due to unplanned spending on drought relief and tax waivers, while overall revenue is well below the target of $30 billion for the year. Fiscal shortfalls may force the government to impose spending cuts on development projects. Source: Hindustan Times

Despite its budget woes, the Maharashtra government is considering raising taxes on property sales by only five percent this year, instead of the 15-18 percent announced earlier. The government faced strong opposition to a larger increase from its own legislators, particularly in advance of Mumbai Municipal Corporation elections in 2017. Source: Business Standard

Maharashtra has retained the top position in general insurance premium collection and penetration. Premium collection in Maharashtra reached $2.9 billion on insurance penetration of 1.15 percent. Source: Economic Times


Nothing critical to report this week.


The national Election Commission of India has directed the Tamil Nadu government to transfer officials who have been holding the same election-related posts for three or more years. Source: Times of India

A survey carried out by the Industrial Estate Manufacturers Association (IMEA) found that 20,000 micro, small, and medium enterprises have been affected by recent floods in Chennai, displacing more than 200,000 workers. The IMEA estimates that the floods caused a production loss of $1.5 billion, loss of machinery of $303 million and raw material loss of $380 million. Source: The Hindu

Tamil Nadu chief minister J Jayalalithaa has asked the center for $4 billion in assistance for post-flood restoration. Source: Economic Times

The central government will proved $102 million to help build low-income housing in Telangana. The Telangana government proposed building 45,217 houses for the urban poor in 27 cities, at a total cost of $564 million. Source: Economic Times

Telangana has cleared investments worth over $4 billion in the six months since the introduction of the Telangana State Industrial Project Approval and Self-Certification System (TS-iPASS). Source: The Hindu

Undocumented Telugu migrant workers in Kuwait have been jailed following a large-scale annual sweep by Kuwaiti authorities. Source: The Hindu


The Union Cabinet approved the construction of the first phase of the Lucknow Metro, to be built at an estimated cost of $1.05 billion. Project Phase – 1A will build 22 stations in the 14 miles between Chowdhary Charan Singh Airport and Munshi Pulia. Source: Economic Times


West Bengal State Electricity Distribution Company will select short-term power suppliers by choosing the low bidder in online auctions and pass on the cost savings to consumers. The power utility saved nearly $13.4 million after one such e-auction. Source: Economic Times

West Bengal chief minister Mamata Banerjee reiterated her opposition to the central government’s proposed Petroleum, Chemicals and Petrochemicals Investment region (PCPIR) in West Bengal, saying that she would never allow a chemical hub in the state. Source: Economic Times


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