Central Government eye on illegitimate Income and Debt Adjustments of AP

The State Government sends inconsistent answers on loans raised by it about the recent Central Government letters, those replies may not be considered by the Center when the replies are against to the Accounting systems. Although the central government seeks information on the debts and other financial management of all the states in the country as the policies of the States are in risk not only to the state but also to the country due to illegitimate procedures adopted in raising debts and financial management. But the Central Government agencies follow strict accounting practices with regard to financial management though there is a risk of deteriorating state finances due to faulty financial management by the state government. As far as Andhra Pradesh is concerned, the Debt-to-GDP ratio, which currently stands at over 35 per cent, is at probable risk of rising to 70 per cent after consider the following amendments :

1) Adjustment of Future Borrowing Limits:
Loans already raised in excess of FRBM limits for the financial years 2020-21 and 2021-22 have to be adjusted against the future borrowing limits, while now the budget for the current financial year 2021-22 is 37,030 crore as per FRBM limits, according to the monthly actual accounts on the CAG website by February 2022, the Debts had been reached to Rs 51,112 crore meant that at least another Rs 17,000 crore of additional debt had to be adjusted in the future borrowing limits. However, according to the revised estimates for the current financial year, the state government has shown Rs 38,224 crore in the recent Budget, while the CAG website’s actual figures till February are Rs 51,112 crore. This means that loans raised in the last two financial years exceeding the total limit of nearly Rs 35,000 crore may have to be adjusted in the future limits as per the letter from the Central Government. Now the state government has projected a budgeted debt of 3.64% of GDP at Rs 48,724 crore for the current financial year 2022-23.

Note:
Here the budget estimate loans are made as per GSDP estimates so what is the actual GSDP is also important, the actual debt limit should be calculated according to the actual GSDP for that year and Debts Limits shall be adjusted according the facts only.

2) Additional credit limit for power reforms:
Implementation of reforms in the Power Sector will provide additional loans up to another 0.5% of the GSDP and make up to 4%, but projected Debt 3.64% of the GSDP for the Fiscal Year 2022-23, which is likely to allowable net result is 4% GSDP as Debt. in this case, is that difference of 0.36% earmarked for adjustment of excess debt made in previous years?, Important point is, the debts have been raised every year beyond budget expectations.

3) Assessment of Net Loans:
Based on the statistics of the State Government, the open market, loans from the Central Government, loans from foreign institutions, the amount used from the public and in the form of small savings, PF, Reserve Funds, Deposits are considered for Calculations and Net Debt is assessed. Although this is a simple process of calculating debts, such a adverse comments can only be made when the juggling of accounts with internal adjustments with illegitimate practices.

4) Calculation of pensions and future payments:
These factors are not properly reflected in the fiscal deficit, meaning that pensions and future state government obligations mean that payments are crucial at the time of employees retirement for every year and post retirement benefits obligations on the State Government. Union Government said that a credit limit to the State is set after taking into account of all these facts and these are not properly accounted for by the State Government.

5) Consideration of Corporations and SPV Loans:
The fact is that the debts of corporations have already been diverted to state Government Schemes continuously. Union Government had noticed that Corporations and SPVs in the State do not have separate income sources to pay their debts and interest and Budget revenues are clearly being used to serve these loans and interests thereof. Hence, the consideration of these loans come under the FRBM limits to adjust against future loans.

6) Consideration of loans made through tax and cess revenue:

It is a fact that in the years 2020-21 and 2021-22, the proceeds from the budget would be transferred to AP SPDCL through specialized GOs and about Rs 25,000 crore will be covered under FRBM limits as per the accounting procedures. In additiontothis, there is a situation where all such loans have to be evaluated and the loans made beyond the limit are considered as additional loans raised to adjust against future loans as these loans have been considered as like Budgetary Debt.

7) Electricity arrears:
Power arrears also being brought under the debt limit under the state budget FRBM, the state government is likely to have an impact of the existing Rs 25,000 crore of Discom arrears on future credit limits of the State.

Many other above mentioned such Debts and financial factors also need to be adjusted, as the central government speeds up the process of increasing the Productive Capital expenditure to provide future revenue to the State by reducing the Debt burden and adopting non-productive expenditure controls and methods for the future of the country and the state.

Thank you …
Yours
Lanka Dinkar
BJP political feedback pramukh

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