Inside sources state that the Centre has taken loan from Nabard. Meanwhile, the Union finance ministry has asked the state government as to where to include the amount- in the Fiscal Responsibility and Budget Management limit of the Centre or the state.
The AP finance department said that this amount should be included in the Centre's FRBM limit since Polavaram was a national project. In fact, the AP government is seeking 100% funding from the Centre for its completion.
The Centre had initially allotted Rs 100 crore for the Polavaram project.
The Union finance ministry has proposed to release this sum on a 70-30 ratio. This means that the Centre's share in 70 per cent while the state's share is 30 per cent. However, Union water resource minister Uma Bharthi has opposed this proposal, instructing the finance ministry to release these funds on a 90:10 ratio, making the Centre's share to be 90 percent and the state government's share as 10 per cent.
The release of funds had initial hiccups as the state government had allotted Rs 3,000 crore for the project in the budget, assuming that the Centre would release more funds for the same. The state government had objected to the allocation of funds by the Centre and had thought of asking the Centre to allow borrowings for the project.
However, it was advised that since it is a national project, it was also the Centre's responsibility to complete the project. AP wants to complete the project by 2018-end, which is a year ahead of general elections.