In a big relief to the financially-crippled Andhra Pradesh government, the Centre has given approval to the state for borrowing another Rs 10,500 crore through open market.
After hectic lobbying by state finance minister Buggana Rajendranath with Union finance minister Nirmala Sitaraman and other top officials of the Ministry of Finance with whom he held a series of meetings in the last few weeks, the Centre finally conceded the state government’s request for additional borrowings.
The department of expenditure of the Union ministry of finance sent a communique to the Reserve Bank of India that it was allowing the Andhra Pradesh government to go in for additional market borrowing to the extent of Rs 10,500 crore.
The state government has been facing severe financial crunch due to sharp fall in revenues due to Covid-19 and the central share in the taxes.
While the Jagan Mohan Reddy government has been ensuring that the welfare schemes are not halted, it is facing troubles in paying salaries to the employees on time.
It is compelled to go in for overdraft facility with the RBI every time to meet the day-to-day expenses. The state is not able to go in for additional loans due to restrictions imposed by the Centre for additional borrowings.
The state has already exceeded the borrowing limit under Fiscal Responsibility and Budget Management Act for the first nine months, by borrowing the last tranche of loan of Rs 1,000 crore last week. This has closed all the doors of the state for taking more loans from the market.
Thanks to the intense lobbying by Buggana, state chief secretary Adityanath Das and other officials in New Delhi, the Centre has finally agreed to the request of the state for additional borrowing to the extent of Rs 10,500 crore.
This amount can be borrowed till December. As a result, the borrowing limit of the state government for the first nine months has been enhanced to Rs 31,251 crore.
It is a big relief to the state government for now, as it has overcome the financial crisis at least for now.
