Flip-flops in Andhra Pradesh sand policy

[andhra_jp]

Andhra Pradesh has repeatedly changed its policies, leading to substantial revenue losses

Andhra Pradesh has witnessed many flip-flops in sand policies over the past decade. The current government issued GO 43 in July 2024, which withdrew the existing sand policies — namely, the New Sand Mining Policy 2019 and the Upgraded Sand Policy 2021 — and replaced them with an Interim Mechanism for Sand Supply until the formulation of the Sand Policy 2024 for the State. With this free sand policy came into existence again.

From a novel experiment of entrusting the job of sand supply to Self Help Groups (SHGs) to free sand, auctioning sand reaches, and back to free sand supply. The successive governments have formulated policies that match their requirements. Both ruling and Opposition parties have gone beyond mudslinging, initiating probes into the sand policies of their predecessors as soon as they assumed power. A political narrative is built that the previous government indulged in large-scale corruption and illegal sand mining. 

In the process, the sand, a precious natural resource, is plundered and the State’s coffers hardly fill with the supply of sand. The YSRCP, TDP, and NDA governments have undervalued the possible revenues through the sale of sand. 

Neither of these governments has provided actual estimates of annual sand availability, its total value, or potential revenue for the State.

In 2023, then Mines Minister Peddireddy Ramchandra Reddy claimed that his government made around ₹3,000 crore from sand auctions over four years. In contrast, the NDA government, in a white paper, stated that withdrawing the free sand policy and illegal sand mining resulted in a loss of ₹6,940 crore, with unpaid dues from sand contractors amounting to ₹1,167 crore, totaling losses of ₹8,107 crore. In another paper on State finances, the government said that the loss was ₹7,000 crore due to illegal sand mining.

It is pertinent to mention that the auction of sand used to fetch ₹4,000 crore to ₹5,000 crore a year before the swift change in sand policies became a trend. Over the past eight to 10 years, the Andhra Pradesh government suffered a loss of not less than ₹40,000 crore. And, it would continue to suffer much more.

If the growth in Gross State Domestic Product (GSDP) (13.5% from 2014-19 and 10.5% from 2019-24) were taken into consideration, revenue from an auction of sand should fetch not less than ₹9,400 crore (at GSDP growth of 13.5%) and ₹8,200 crore (at GSDP growth of 10.5%) per a year.

The government also argues that the Compound Annual Growth Rate (CAGR) of revenue from mineral wealth was growing at 24% during 2014-19, and fell to seven per cent during 2019-24. Mineral revenue would have gone up to ₹7,239 crores by 2024 if the 24% CAGR continued. Going by the same analogy, revenue from the auction of sand should be no less than ₹13,600 crore per annum. So, the revenue through the auction of sand reaches should be around ₹41,000 crore to ₹47,000 crore if GSDP is considered, and ₹68,000 crore if the CAGR of 24% is applied, in the next five years. In addition, the government would also get a GST and Seigniorage Fee on the sand sold. But, as said earlier, successive governments have undervalued the precious natural resource, sand, for reasons best known to them.

Farmers’ leader Anumolu Gandhi, Waterman of India Rajendra Singh, and others filed a Public Interest Litigation in the National Green Tribunal highlighting how sand mining was being carried out illegally near the then CM N. Chandrababu Naidu’s residence and also important government offices in Amravati in 2019. The NGT slapped a fine of ₹100 crore on the State government and the case is still pending.

When Mr. Naidu came to power in 2014, he had roped in SHGs in villages that would oversee the excavation and sale of sand mining under a programme ‘Pedarikam Pai Gelupu’ (victory over poverty). As the initiative failed to meet expectations, some months later, Mr. Naidu changed the policy and introduced a tendering system for the sale of sand. It resulted in litigation in the Hyderabad High Court in 2015. The legal heat made the TDP government do another flip flop and he declared his government would sell sand free of cost to consumers. This was in March 2016. The YSRCP government scrapped the free sand policy and introduced a new sand policy in 2019. The NDA government recently scrapped the YSRCP government’s sand policies and reintroduced the free sand policy.