Amaravati: Centre allows State to go for additional borrowing of Rs 10,500 crore
- The department of expenditure of the Union Ministry of Finance sents a communique in this regard to the Reserve Bank of India
- Between April and November 2020, the State borrowed Rs 73,811.85 crore from different sources as against the annual target of Rs 48,295.59 crore for the previous financial year
Amaravati: In a big relief to the AP government, the Centre has agreed to its proposal for an additional borrowing of Rs 10,500 crore through the open market. The government reeling under financial constraints has been facing difficult times in managing even the salaries of its employees and has been facing flak from several quarters.
Chief Minister Y S Jagan Mohan Reddy has repeatedly deputed his Finance Minister Buggana Rajendranath Reddy to New Delhi to address the issue and finally succeeded in securing the Centre's clearance for the same.
The department of expenditure of the Union Ministry of Finance sent a communique to the Reserve Bank of India that it was allowing the Andhra Pradesh government to go in for additional market borrowing to the extent of Rs 10,500 crore.
The letter was sent a couple of days ago in the aftermath of Buggana's Delhi visit. The Minister is said to have detailed the financial position of the State alongside the reasons for the same, putting the onus on the previous regime in his interaction with the Union Finance Minister Nirmala Sitharaman. He is said to have also detailed the welfare measures adopted by the government to help marginalised sections tide over the post-Covid-19 impact.
The State government has been forced to seek overdraft repeatedly from the RBI apart from borrowing from the local banks.
The State has already exceeded the borrowing limit under Fiscal Responsibility and Budget Management Act for the first nine months, by borrowing the last tranche of loan of Rs 1,000 crore last week. This has closed all the doors of the State for taking more loans from the market.
Recently, the Centre has cut down the State's borrowing limit by almost 35 per cent due to financial indiscipline. The Centre had issued an order restricting the State from borrowing funds from the open market to Rs 27,668 crore.
The limit was originally Rs 42,472 crore for the fiscal 2021-22, which was decided on the basis of its GDP which is Rs 10,61,802 crore for the year. However, as the spending of funds so far was not in compliance with the Central finance department's norms, the Union government intervened to restrict further borrowings.
The Union Finance Department Assistant Director Sumit Agarwal wrote to the State's Principal Finance Secretary Shamsher Singh Rawat informing the Centre's decision reducing the borrowing limit to Rs 27,668 crore from the original Rs 42,472 crore.
The Centre had asked the State to submit complete details of the loans already borrowed in the last three years.
The details submitted by the State showed that the government had already crossed the limits by nearly Rs 18,000 crore.
Added to this, the government also raised Rs 6,000 crore from various sources. Deducting these amounts from the previous limit of Rs 42,472 crore, the Centre reduced the limit to the extent of excess loans.
The development came in the backdrop of mounting criticism from various quarters that the Y S Jagan Mohan Reddy regime was resorting to direct cash transfers for political reasons at the cost of exchequer.
The Jagan government has been raising Rs 10,000 crore debts on an average every month only to spend that money on populist schemes under Navaratnalu programme, the Opposition including the BJP repeatedly alleged.
By the end of November 2020, the AP government's gross debt burden has increased to Rs 3,73,140 crore, according to CAG report.
The latest accounts revealed that from April to November 2020, the State borrowed Rs 73,811.85 crore from different sources as against the annual target of Rs 48,295.59 crore for the previous year.