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How Naidu pushed A.P. on to the brink of a debt trap?

chandrababu-naidu

The Andhra Pradesh State debt increased by 132.31 % during 2014-19 the period the Telugu Desam (TDP) Government was at the helm of affairs and the president of the regional party N Chandrababu Naidu was the Chief Minister, according to a note on the Debt of the State. This is seen as the period during which corruption was at its peak in the state and the ranking of Andhra Pradesh in corruption when compared to other states in the country shot up. Using the bifurcation of the erstwhile Andhra Pradesh as a golden opportunity the TDP Government borrowed huge amounts for the purported development of infrastructure and used various methods and means to fill the coffers of its leaders. 

The excessive borrowing by the state Government can be easily understood by comparing it with the performance of the Central Government which was the average of all other states, the note explained. The borrowings by the state in the period (2014-19) reached alarming levels. While the increase of the debt by the Central Government was just 49.92 per cent the increase of Andhra Pradesh’s debt was 132.31 per cent.The TDP government spent Rs 6,000 crore in the first ten days of 2019 April according to the note released by the Jagan Mohan Reddy government at the end of the financial year. The compounded annual growth rate of the state Government debt was more than double of the Central Government debt. 

Off-budget borrowing

 In addition to the heavy borrowing the misuse of funds multiplied the  liabilities the state manifold. The outstanding amount on March 31, 2019 was a huge Rs 39,000 crore. The off-budget borrowings was to a tune of Rs 58,000 crore. There was a huge increase in the borrowings of the power sector. The borrowing which were Rs 33,587.98 crore in 2014 increased to Rs 70,254 crore in 2019. The dues to the DISCOM has increased from Rs 2,893.23 crore to Rs 21,540.96 crore in the crucial period. Owing to this alarming increase in liabilities of the State over the five year period 2014-19, the servicing cost of the debt has risen to more than Rs. 25,000 crores. Had this borrowing supported productive expenditure, various sectors in the State would have been substantially improved. However, such is not the case.

 Misrule compounds debts

Owing to the misrule during the period 2014-19, sectors such as agriculture, health and education have fared poorly. Agriculture debt waiver was promised by the previous Government. The agricultural advances outstanding (farmers debts) on March 31, 2014, in accordance with the minutes of the 184th SLBC meeting, was Rs. 87,612 crores. However, the TDP Government limited the loan waiver amount to Rs. 24,000 crores duly imposing several conditions. Even of this amount, only close to Rs. 15,300 crores was actually disbursed to farmers. Consequently, the NABARD All India Rural Financial Inclusion Survey, 2016-17, indicates that indebtedness amongst agricultural households in Andhra Pradesh was as high as 77 per cent,  when compared to the National average of 47 per cent. The policies, programs and actions of the previous government deepened the agricultural distress, instead of alleviating the structural problem, the note by the state government said. 

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