AP runs out of money, delays salaries, pensions
The Andhra Pradesh government did not have funds in the exchequer on Tuesday to clear the entire salary bill of its employees and pensions on pay day.
With about `1,600 crore availed from the Reserve Bank of India through ways and means being disbursed to Chief Minister Y.S. Jagan Mohan Reddy’s pet populist scheme of social pensions, finance managers were left with meagre funds to pay salaries. Official sources told Deccan Chronicle that the government had been trying to mobilise `3,000 crore through open market borrowings in a day or two to fill its coffers. With revenues falling due to Covid-19 and burden of populist schemes increasing, the state economy has reached a precarious situation, sources added.
As per the stringent Fiscal Responsibility and Budget Management Act cap on borrowings — three per cent of the Gross State Domestic Product — the state is permitted to borrow `3,0000 crore for the current fiscal of 2020-21.
Of this, it has already exhausted `23,000 crore in the first quarter. The government also resorted to out-of-budget borrowings of at least `12,000 crore so far.
Though the Centre relaxed FRBM norms and allowed another two per cent borrowings, 1.5 per cent will come with strings attached and only 0.5 per cent can be raised without restrictions. “Of the `5000 crore that can be borrowed without restrictions, we are raising `3,000 crore in a day or two,” a senior official said adding that another
`2,000 crore can only be raised in the next seven months.
The government has been exhausting the ways and means as well as over draft facility on a regular basis. Source said the government can borrow a maximum of `20,000 crore as per the existing provisions and another
`15,000 crore if it can implement the stringent conditions that the Centre has imposed to avail the 1.5 per cent enhanced borrowing limit.
The Chief Minister, according to sources, reiterated at a recent meeting that his priority would continue to be the implementation of the Navaratnalu, the populist and cash transfer schemes and the finance department should arrange funds for their smooth implementation.