The state does not have the capacity to bear the debts
The per capita due is Rs.67,484
44.04 percent of GSDP for March 2021
Those debts are for repayment of loans
Poor financial management of the state
CAG report that broke the pot
In general, the loans taken by the state should be used for asset creation and development programs. Borrowing to pay interest on loan arrears leads to financial instability. In Andhra Pradesh, old debts are being settled by taking loans. Instead of creating assets, it is being used for revenue expenditure. The state has no debt servicing capacity.
– This is the CAG report warning
Today, Amaravati: CAG has warned that the state is reeling under the burden of debts and if there is no proper strategy to settle them, funds for development programs will decrease. The CAG report on the economic conditions of Andhra Pradesh in the financial year 2020-21 was tabled in the Legislative Assembly on Wednesday. The FRBM Act states that the total arrears for the financial year 2020-21 should not exceed 35 percent of the GSDP. As on March 31, 2021, these loans were 35.30%, which exceeded the limits. If we consider the loans taken from outside without showing in the budget, the share of loans in GSDP is increasing to 44.04%,’ the CAG clarified in its report. According to the situation as on March 31, 2021, 45.74% (Rs. 1,23,640 crore) of debt is to be cleared in the next seven years, and if there is no proper strategy, the funds for development programs will be reduced, it warned. ‘Our debts are less. We are managing the economy well. The government submitted the CAG report to the Legislative Assembly two days before CM Jagan announced that we are incurring more debts. The details are as follows..
Debt for 331 days in a year!
The state should maintain a daily cash balance of Rs.1.94 crore with the Reserve Bank. In the financial year 2020-21, there are only 34 days. The remaining 331 days had to be taken from the Reserve Bank.
Risky with secret loans
In Andhra Pradesh, by March 31, 2021, the government has taken a loan of Rs.86,259.82 crores without showing it in the budget. These loans are obtained through various corporations and institutions. If these are added, the total arrears are Rs.4,34,506 crores. All these are state government dues.
Exemption of bills is unconstitutional
It is unconstitutional to deduct electricity dues directly at the source from the revenue of Panchayati Raj bodies in Andhra Pradesh. Rs.854.19 crores have been deducted through 10,597 special bills.
Per Capita
Dues * If a man had dues of Rs.50,156.80 in 2018-19, it has increased to Rs.67,484.88 by the end of March 2021.
Increasing every year…
The CAG has concluded that the debt in Andhra Pradesh is increasing every year. It clearly states that the debt burden is increasing for years to come. It has been analyzed that the state government is using loans to meet the revenue expenditure. It said that 81% of the loans taken by the state are used for revenue expenditure. It is believed that this is hindering the creation of assets in the state. On the other hand, it is said that they are taking large amount of loans without showing it in the budget. With this, it is wrong to show that total debt and fiscal deficit have been reduced. Due to this, the share of loans in the state’s gross product has increased to 44 percent.
The CAG said that the net collection of Rs 7,268 crore had to be used to cover the fiscal deficit in the financial year 2020-21. For this, the state government has stated that the loans have increased due to Covid, but the CAG has analyzed that Andhra Pradesh’s allocation in the health sector is low. While other states spend 6.74% of funds on health sector, Andhra Pradesh said that it spent only 5.49%.
To reduce debt and fiscal deficit…
various public sector organizations are taking loans on government guarantee. These are not shown in the budget. CAG analyzed that by not taking these into public debt or fiscal deficit, both are being understated. In Andhra Pradesh, the state is forced to take fuel from time to time for day-to-day operations. The amount taken in that form is Rs.1,04,539 crores in 2020-21. They have increased by 73.16% compared to the previous year.
Slowdown in economic growth
Andhra Pradesh recorded lowest GSDP in 2020-21. While the state was growing at over 10% annually, it fell to 1.58% in the last financial year. Due to economic slowdown due to covid.
Debt growth trend
The amount of outstanding debt as of 2021 is more than the outstanding amount as of 2016. It is said that the percentage of increase in these arrears has been increasing significantly. In the financial year 2016-17, the loan arrears were Rs.2,01,314 crores, and by 2019-20 they have reached Rs.3,48,246 crores. 72.99% CAG said that there is an increase in loan arrears.
* Revenue deficit reaches five-year high. The highest revenue deficit of Rs.35,541 crores occurred in 2020-21.
