Central Government approves Rs 11,500 Crore relief package

metro india news  I visakhapatnam

The Central government has approved a substantial financial package of Rs 11,500 crore to revitalize the struggling Visakhapatnam Steel Plant. The package comes as a major relief to the community puts all fears of privatization at bay and also preserve the state’s industrial heritage.

Andhra Pradesh Chief Minister Chandrababu Naidu has been closely engaged with the Centre regarding the revival of Visakhapatnam Steel Plant since assuming power. Over the last few months, he has met Prime Minister Narendra Modi and Union Ministers multiple times, making a strong case for financial assistance to sustain the plant. The discussions culminated in the announcement, in a much-needed relief or the steel plant which has been facing severe financial crises.

During a recent visit of Union Steel Minister Kumaraswamy to the steel plant, Visakhapatnam MP Sribharat, TDP state president Palla Srinivasa Rao, and trade union leaders had sought financial aid of Rs 18,000 crore to ensure the plant’s sustainability. While the Central government had allocated Rs 500 crore earlier for GST payments and Rs 1,150 crore in two installments for bank loans pertaining to raw materials under the Emergency Advance Fund, the Rs 11,500 crore package is aimed at providing comprehensive support to the plant.

The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, gave the green signal for the package during a meeting on Thursday.

Visakhapatnam Steel Plant, known for its annual steel production capacity of 7.3 million tonnes, has been grappling with massive losses in recent years. In the fiscal year 2023-24, the plant reported a loss of Rs 4,848.86 crore, while in 2022-23, the loss stood at Rs 2,858.74 crore

The primary reason for the financial distress is the high debt incurred for working capital, coupled with a shortage of raw materials and challenges posed by court attachments and insolvency proceedings. The funds will cover operational costs and stabilize the plant.

Revival plan

The proposed Rs 11,500 crore financial package will be crucial in addressing the steel plant’s mounting financial issues. A significant portion of the package, approximately Rs 10,300 crore, is expected to be raised through bond redemption, with the remaining will be sourced through other means. The Union government has assured that a detailed roadmap will be unveiled soon to guide the implementation of the massive economic package.

The NDA government’s focus on strengthening state-run industrial units has been evident in its recent initiatives to provide financial relief and operational support to various sectors. The Cabinet Committee on Economic Affairs’ approval marks a significant step towards ensuring the long-term viability of Visakhapatnam Steel Plant.

With the financial backing, the plant is expected to recover from losses and contribute more effectively to the nation’s steel production needs. An official announcement regarding the details of the package is expected soon, which will provide further clarity on the execution plan.

Chandrababu Naidu stated that the Vizag Steel Plant is more than just a factory, it stands as a monument to the struggles and spirit of the people of Andhra Pradesh, holding a special place in the hearts of all, especially the people of Vizag. This was not merely an election promise; it was a deeply personal commitment we were determined to honour. Good days ahead for Andhra Pradesh.

Curious case of VSP

The Vizag Steel Plant agitation of the 1970s was a pivotal movement in Andhra Pradesh's history. It began in 1966 when the central government, led by Prime Minister Indira Gandhi, backtracked on its promise to establish a steel plant in Visakhapatnam, citing a lack of funds. This decision outraged the people, especially the youth, who had been promised industrial development and employment opportunities.

Students from Andhra University, Andhra Medical College, and local schools led protests, which quickly gained momentum with support from the Communist Party of India (Marxist) and the Communist Party of India, emphasizing industrialization to combat underdevelopment.

The central government’s deployment of the army to suppress protests escalated tensions, resulting in violent clashes and casualties, including a nine-year-old child. A defining moment was T. Amrutha Rao's indefinite hunger strike in 1966, which galvanized public support and spread the agitation across Andhra Pradesh.

The slogan "Visakha Ukku, Andhrula Hakku" ("Visakha Steel is the Andhra People's Right") became the rallying cry. The movement eventually forced the government to act. The foundation stone for the plant was laid by Indira Gandhi in 1971, with the Soviet Union assisting in its construction.

Commercial production began in 1982, transforming the plant into a significant industrial hub, boosting employment and regional economic growth. The Vizag Steel Plant agitation remains a powerful example of collective action driving social and economic progress.