Hyderabad: Andhra Pradesh state is going to face a precarious financial situation in the near future and is at risk of falling into a debt trap.
The AP Finance department has prepared a report on the state’s finances and debt forecast up to 2021-22. According to its projections, if the present trend continues, the state will be spending its money defraying debts, which will leave only small funds for capital expenditure.
According to central government rules, the debt ratio to Gross State Domestic Product (GSDP) should not cross the 25 percent mark, but it has currently. In the current fiscal, the debt ratio is 28.59 per cent against the 25 percent limit and the Finance department has projected that this ratio will cross 30 percent by FY2021-22. The current total debts — Rs 17,9,140 crore — will turn into Rs 30,2,957 crore by FY 2021-22. In the current financial year, the state government’s borrowing limit is Rs 18,796 crore.
