Andhra Pradesh government is currently battling the bad financial effects of the State Bifurcation. The deficit budget of the state is taking a heavy toll on its fiscal health.State government is seeking allowances in the debt structure to bring in more debts from the market.
According to the Fiscal Responsibility and Budget Management Act (FRBM), the debts of a state should not be more than 3% of its GSDP. But the deficit budget and the new capital expenses do not allow Andhra Pradesh to be within the limit and the state government has appealed to the Center to amend the FRBM act to enable the residuary state to borrow up to 7 per cent of its GDP for the next five years.
The Union government is sitting on the request of the state government for a long time. The other Telugu State, Telangana also also pitched up a similar demand for relaxation of FRBM targets to help secure more borrowings. Allowing AP will mean Telangana should also be given a chance. Allowing both the states will enable similar demands from the other states.
