AP headed towards a great financial crisis

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It is no secret that the state of Andhra Pradesh is not in the best of places, economically. In fact, in all honesty, it is in one of the worst places, with all of its welfare schemes sucking the treasury of the state dry, and the state’s revenue not being enough to bridge the gap.

In a recent report, CAG said that the loan amount taken by the state in the last ten months stands at Rs. 73,913 Crores. The budget estimate is Rs. 48,295 Crores, which is 153% higher than the estimate. While the revenue deficit in the budget is estimated at Rs. 18,434 Crores, the actual revenue deficit stands at Rs. 54,046 Crores, which means that that the revenue deficit had widened to 300%, and all of this is despite the fact that the state’s revenue has increased.

The state of Andhra Pradesh had a debt of Rs. 46,503 Crores by the end of January last year, ranking fourth in the country, in terms of open market borrowing. CAG even examined the state in December 2020, for 30 days of special drawing, 26 days of money changing hands and 3 days of overdrafts.

Open market borrowing is usually opted for, when there is no other option left, with respect to borrowing. However, the state has exhausted even this avenue, along with three other avenues, putting its financial position in the most pathetic state possible.

The government of Andhra Pradesh will have to come up with a solution immediately, that can rid its financial problems. Else there would be severe repercussions, which the people would have to face, in case the government fails to sail the state out of this financial crisis.

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