Insensitive Center, AP finances in deep trouble!

With an insensitive Central government not helping Andhra Pradesh as much as it should, the truncated state is reeling under the pressure of severe debts. According to the existing norms, debt of a State should not exceed 25 per cent of the Gross State Domestic Product (GSDP) while interest amount payable on loans cannot go beyond 10 per cent of the revenue.

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But AP already crossed both. According to the socio-economic survey 2015-16, its GSDP is estimated at ₹6.83 lakh crore while debts stood at ₹1.90 lakh crore accounting for 27.88 per cent of GSDP. The low GSDP is because the state has lost ‘significant’ portion of her resource base after division.

The Center had allowed Telangana and some other states to go for more borrowing by increasing the FRBM limits, but the same demand by AP is not met citing the technical reasons. At the same time, the Central government is also not giving the money to bridge the revenue deficit which it is entitled to do under AP Reorganization Act.