It is reported that Mr SV Seshagiri Rao, a senior BJP leader, suggested setting up of the proposed steel factory in a place endowed with water resources, rather than in Kadapa, in view of the likelihood of severe water scarcity in Rayalaseema.

Mr Rao said that the water problem would be so acute after 10 years that every drop would have to be utilized either for drinking or irrigation. It would be unwise for the Government to encourage setting up of steel or paper factories in Rayalaseema in such a situation.

Mr added that if t2 thousand million cubic feet would be utilized from the Gandikota reservoir for the proposed steel plant at Kadpa, more than 20,000 acres of in Chittoor district under the Galeru Nagari Srujala Sravanti Project would be affected.

Andhra Pradesh government has signed a MoU with Bramhani Industries Limited, a company promoted by Obulapuram Mining Company in Bellary, to set up an INR 4,500 crore integrated steel plant in Kadapa district of Andhra Pradesh after Andhra Pradeshs State Investment Promotion Board cleared the project. As per reports, the plant will produce 2 million tonnes of steel in the first phase and may later expand it to 10 million tonne at an investment of INR 20,000 crore by the year 2017.