Andhra Pradesh stares at big financial crisis

Hyderabad: Whoever comes to power in Andhra Pradesh will face a serious financial crisis this year. The state government borrowed Rs 5,000 crore in April, the first month of the current financial year.

To grant sops to people in view of the Assembly elections, the Telugu Desam government borrowed the money just one week before the polling on April 11.
The TD government disbursed about Rs 15,000 crore under Annadata Sukhibhava, PasupuKumkuma, social welfare pensions schemes and the last phase of the farm loan waiver, just four days before the polling date.

The AP government had asked the Centre to permit it to borrow Rs 32,000 crore in the current financial year. After calculating the Gross State Domestic Product (GSDP), the state government calculated that its borrowing capacity would be Rs 32,000 crore this year.

The Centre allowed borrowing of only Rs 8,000 crore in the four-month period. It said its calculations were different from those of the state government and cleared a smaller amount.

The Centre said that it would decide on the borrowing amount for the current financial year. It pointed out that the state government had presented the vote-on-account budget for four months, and it would allow borrowing of Rs 8,000 crore during the four-month period.

In the previous financial year, the Centre government had decided the borrowing limit at Rs 24,000 crore for Andhra Pradesh. The state government ended up borrowing Rs 5,500 crore over the limit.

The state government asked the Centre for permission to borrow Rs 5,500 crore over the limit and it would adjust this amount in the 2019-20 financial year. The Centre accepted the proposal.

The Centre may allow the state government around Rs 26,000 crore of borrowings in the current financial year. Of this the state has already borrowed `5,000 crore and it has to adjust Rs 5,500 crore of the 2018-19 financial year. After deducting the Rs 10,500 crore, the state government will be left with a borrowing limit of Rs 15,500 crore in the 10-month period till the end of the financial year.

In the recent Assembly elections, both the ruling TD and the main opposition YSR Congress had announced several sops to various sections which translate to a huge financial commitment.

Mr Vasireddy Krishnadevarayalu, CEO of AP Comprehensive Financial Management System, said the state government had asked the Centre to allow  Rs 32,000 crore but was permitted Rs 8,000 crore in the four month-period. He said in the previous financial year, the state government borrowed Rs 5,500 core more than its limit and this amount had to be adjusted in the current financial year borrowings.