Centre allows Andhra Pradesh govt to raise money through open market borrowing
With this, the total OMB allowed to the state during the current year would be Rs 31,251 crore
Amaravati: The Government of India has given a much-needed breather to the cash-starved Andhra Pradesh government, allowing it to raise Rs 10,500 crore through open market borrowing (OMB) for the first nine months of the ongoing financial year.
With this, the total OMB allowed to the state during the current year would be Rs 31,251 crore, the Union Finance Ministry said in a letter to the Reserve Bank of India.
The Centre fixed a Net Borrowing Ceiling (NBC) of Rs 42,472 crore for the state for the year 2021-22, with a borrowing space of Rs 37,163 crore for the first nine months.
A ‘debt statement' prepared by the state Finance Department indicated that a sum of Rs 34,058.80 crore has already been borrowed from April to August this year. The sum includes Rs 14,867.60 crore OMB in the first five months of the current fiscal year, the statement said.
The state's cumulative debt has now shot up to a whopping Rs 3,84,615.66 crore, including Rs 1,27,105.81 crore borrowed by the Jagan government in the last two years.
Besides, other outstanding loans, for which the state government gave guarantees, climbed to Rs 96,500.36 crore, an increase of Rs 47,058 crore in the last two years.
Unable to pay even the staff salaries in time, the Jagan Mohan Reddy government pleaded with the Centre to give consent for raising Rs 17,810 crore through OMB in the first nine months of the 2021-22 financial year.
The Centre adjusted an amount of Rs 17,923.94 crore with the available borrowing space on account of “over-borrowing” by AP during the previous years and thereby brought down the NBC this year.
The state government has been requesting that the Centre review the whole thing in the light of the repayments made under State Development Loans pertaining to the erstwhile united AP, official sources here told PTI.
AP Finance Minister Buggana Rajendranath made several trips to New Delhi and made repeated SOS pleas to Union Finance Minister Nirmala Sitharaman to allow the state borrow more money to meet the basic needs.
But, the Centre found fault with the manner in which the state has been raising fresh loans by pledging future tax revenues.
“Prima facie, the pledging of future tax revenues appears to be not in consonance with the Article 266 (1) of the Constitution,” the Union Finance Ministry noted in a recent letter to the state Principal Finance Secretary.
It sought details of the loans raised by the state and the revenue sources that have been pledged or escrowed to repay the loans.
Last week, the state Finance Minister called on the Union Finance Minister yet again and gave a detailed clarification on the issue, official sources here said.
On September 3, the Department of Expenditure under the Union Finance Ministry wrote to the Internal Debt Management Department of the RBI, asking it to make necessary arrangement in consultation with the state government to raise the OMB, the sources added.