Andhra Pradesh On The Verge Of Clash: Finance Dept Official

YS Jagan Mohan Reddy-led Andhra Pradesh Government seems to be a massive financial disaster. The Government is in a severe debt trap and is running its day-to-day affairs with loans. For many months, the Government did not pay salaries to its employees even in the first week.

Credit rating agencies are flagging the state finances indicating the signs of a financial emergency. In the 2021-22 Budget, Andhra Pradesh projected a revenue deficit of Rs 5,000.08 crore but between April and September alone it shot up to Rs 33,140.62 crore (662.80 percent).

The state government has almost exhausted its loans limit for the year and the future looks bleak for the remaining months. The officials are trying to lobby with the Center to get additional loans. In the first half of the year, AP’s total receipts touched 1,04,804.91 crore, including Rs 39,914.18 crore borrowings.

However, half of the earnings (Rs 50,419.15 crore) have been used for welfare freebie schemes while interest payment (on old loans) and subsidy bills, along with salaries and pensions, rounded off the total expenditure of 1,04,723.91 crore. The spending on Capital expenditure (Creation of new infrastructure and assets) is just around 5% of the total receipts.

A finance department official as quoted by Business Standard said “the crash will certainly happen. The only question is when it is going to happen”. Sadly, there is no concern among those in power and they are boasting about the freebies leading the state into a financial quagmire.