AP’s Budget Deficit crossed the red mark. What’s next?
In the latest news on soaring revenue deficit of Andhra Pradesh, the state’s deficit has gatecrashed the 900 percent mark and currently stands at 918.14 percent. The main reason behind this is, the revenue expenditure and it is way above the revenue that the state earns through various sources.
In the last budget, the AP government estimated that the revenue deficit could be around Rs. 5,000.06 crore but by the end of December, the revenue deficit was Rs. 45,907.65 crore, almost 9 times more than what was portrayed. The previous financial year (2020-21), the revenue deficit stood at 270 percent and it has almost tripled in the last nine months.
Fortunately, the inflow of revenue has been covering for the government’s financial missteps. With Central grants worth Rs. 25,246.19 crore, AP posted revenue of Rs. 97,887.21 crore. The state’s own revenues are growing and from GST, Stamp Duty, Registrations, share from central taxes and others, AP made a revenue of Rs. 69,943.71 crore from nine months.
On the other hand, the state’s debts is spiking massively. In the first nine months of the financial year, the state borrowed Rs. 58,111.85 crore which is against the budget target of Rs 37,029.79 crore and this means it is 156 percent higher.
The YSRCP-led government is spending a lot on welfare schemes which are mostly freebies. And, going by such a spending spree, the Union Finance ministry apparently advised all the national banks to be cautious while lending loans to Andhra Pradesh.
Don’t give loans to AP: Centre
With latest instructions from the union ministry, the Andhra Pradesh State Development Corporation (APSDC) and other corporations that were set up in the last couple of years by the YCP government, are finding it difficult to take fresh loans from banks. The APSDC and other corporations have sealed many deals including mortgaging of properties and registration, with banks for loans but now banks are not reportedly coming forward to sanction loans despite getting guarantee from the state government.
From India’s top bank SBI, AP was supposed to borrow Rs. 1800 crore but the bank is said to have taken a second thought. It’s the same with other corporations too. Through liquor and other corporations, AP planned to borrow thousands of crores but these obstacles are forcing the government to look for alternative ways now. The YCP government established the APSDC for its financial requirements having complete knowledge of AP’s financial affairs. AP government made an agreement with SBI CAP and assured guarantee.
For the financial year 2020-2021, the banks consortium signed a MoU with AP government and here are some details of the banks and the loans that were supposed to be sanctioned to the state. The total loans that were supposed to be sanctioned from different public sector banks are worth Rs. 24,250 crore.
Jagan behind borrowing?
Here are the details: State Bank of India – Rs 6000 crore; Union Bank of India – Rs 5000 crore; Punjab National Bank – Rs 5000 crore; Bank of Baroda – Rs 3500 crore; Indian Bank – Rs 2500 crore; Indian Overseas Bank – Rs 1250 crore; Bank of Maharashtra – Rs 1000 crore. However, sources say that banks aren’t satisfied with the guarantees they have received from Y.S. Jaganmohan Reddy-led government.
With APSDC not creating any income for the state and the Chief Minister himself backing the constant borrowing program for their own political reasons, looks like the state is soon going to tank deep into financial trouble, beyond what we can see right now.
TEJASWINI PAGADALA is an independent communications consultant. She has previously worked with the Andhra Pradesh Chief Minister’s Office as the Communications Officer where she has written English speeches for the CM, managed English media communication from the CMO and handled social media accounts of Andhra Pradesh Chief Minister and the Government.