AP gets shot in the arm as RBI lifts embargo on borrowings
The state is now allowed to borrow Rs 13,500 crore of which Rs 10,000 crore would be raised in next three months
Hyderabad: The Y.S. Jagan Mohan Reddy government has got a major relief with the Reserve Bank of India (RBI) partially lifting the embargo on the Rs 17,000 crore borrowings it imposed on Andhra Pradesh a few months ago.
The state is now allowed to borrow Rs 13,500 crore of which Rs 10,000 crore would be raised in next three months and the remaining amount in the last quarter of the current fiscal.
Official sources told this newspaper that the state finance managers including finance minister B. Rajendranath Reddy and finance principal secretary S. S. Rawat succeeded in convincing the Central agencies on the need to allow borrowings during the turbulent Covid time.
“We could convince the RBI that Rs 17,000 crore the state availed in excess in about five years can’t be adjusted at one go,” sources said adding that the amount would now be adjusted in three or four instalments in the next few financial years.
Post bifurcation, the Telangana government, for a few years, transferred its share of debt servicing to Andhra Pradesh, which, in turn, repaid the loans of the combined state. The previous Chandrababu Naidu government included the amount thus transferred also in its own kitty while getting approval for debt limits. The Jagan government continued the practice for another two years till the accountant general audit raised a flag.
This prompted the RBI to reduce the borrowing limit by Rs 17,000 crore giving a shock to the state which factored in the amount in its annual borrowing plan. “This is a major relief for the cash-strapped state,” sources pointed out.
Meanwhile, the state government also got some good news with regard to the external aid it has been expecting to take up repairs to the existing roads and lay new roads. The state approached the New Development Bank for a loan of about Rs 4,000 crore to improve rural connectivity and develop state highways.
Though a tripartite agreement was signed by the state, the Centre and the bank, the amounts have not been released so far. The state called for tenders also. Meanwhile, the government drew flak for the worsened condition of roads in the monsoon. There was a certain delay by the Centre in clearing the proposals and they got information that it gave the final nod, sources pointed out.