The hasty decisions of YS Jagan Mohan Reddy‘s Government may have landed the country’s image in the soup. Leading Business Newspaper, Business Today reported that Leading global financiers have warned the Indian government, through the Ministry of External Affairs (MEA), that they might drag Andhra Pradesh (AP) to international arbitration for canceling clean energy projects.
Citing irregularities by the previous government, these projects were scrapped by the state government in July. Nearly 7,000 Mw of solar and wind power projects face cancellation in AP, putting more than Rs 40,000-crore investment in jeopardy. Banks have put in more than 21,000 Crore in these projects and they may turn to be Non-Performing Assets.
The Union Government did it level best to dissuade the State Government from canceling the Project. Even the courts tried to interfere but the Chief Minister would not listen. With the arbitration threat, the Central Government may be forced to take a tough stance.
Fearing that AP will set a precedent for other states, the Central Government is also mulling to bring in legislation which will not allow canceling the contracts arbitrarily after reaching a certain state. Unless there are proofs of Corruptions, heavy penalties will be imposed on the State Governments who resort to such irresponsible acts.