Andhra Pradesh’s total borrowing was more than Rs. 73,000 crore from April to November 2020, according to a report by CAG. This is 153% of the budgeted borrowing for the entire fiscal year and 111% higher than the previous fiscal. Among the states in the region, the next largest borrowing is of Tamil Nadu with Rs. 37,000 crore until November 2020. Andhra Pradesh has borrowed more than other South Indian states such as Karnataka, Kerala, Tamil Nadu, and Telangana for the eighth consecutive months this year.
Andhra Pradesh now has a revenue deficit of nearly Rs. 58,000 crore which is 314% higher than the estimated Rs. 18,000 crore for FY 2020-21. In comparison, that of Tamil Nadu is Rs. 28,000 crores, 76% of the budgeted amount.
Jagan Mohan Reddy announced a number of freebies schemes in the state, with one such installment scheduled for December. The YCP government borrowed Rs. 13,000 crore in the month of November itself. This was a 130% increase from the previous month when the monthly borrowing of the state was Rs. 5,640 crore. It is estimated that the total borrowing of the state government may reach Rs. 1.04 lakh crore by the end of the financial year. Since the Jagan Mohan Reddy government has been in power it has managed to accumulate Rs. 1.07 lakh crore worth of debt from various sources.
Apart from massive borrowings, the YSRCP government has systematically raised the burden on the taxpayer. Tax revenues have more than doubled since April 2020. In the month of October, Rs. 10,000 crore was raised in taxes, as compared to Rs. 4,900 crore in the month before. On the other hand, the government has delayed payments of salaries to employees and cited the impact of COVID-19 on revenues to deny payment of six Dearness Allowances (DA).
Payment of interest on past borrowings is an additional burden on the state. This expense neither generates revenue for the state nor can be used for development. The YCP government has paid more than Rs. 12,000 crore in interest this financial year as compared to Rs. 9,600 crore in the previous year. According to senior bureaucrats, around Rs. 35,000 crore per year will be required only to cover interest payments on existing loans. As more and more funds are spent in paying off interest, lesser and lesser remains for the betterment of the people.
Jagan Mohan Reddy’s management of state finances raises questions on his and his government’s competence in the matter. Prospects of the economic development of Andhra Pradesh seem bleaker with each new report of the CAG. A state where the key focus is on finding sources for additional borrowings and where interest payments keep increasing is clearly headed toward a debt trap.