The Union finance ministry has found that Andhra Pradesh had indulged in over-borrowing of an amount of Rs 17,923 crore since 2016-17 till date, as a result of which the Centre has adjusted the amount with the available borrowing limit of the state.
In a letter to the state government on June 30, a Union finance department official said repayments and other borrowings of the state were considered based on the information provided by Andhra Pradesh in its letter dated 22.04.2021.
The state government had earlier written to the Centre on June 21 requesting to give consent for raising open market borrowings of Rs 17,810 crore for the first nine months of FY 2021-22.
It said the net borrowing ceiling of the state was fixed at 42,472 for the year 2021-22. However, only 3.5 percent of Gross State Domestic Product (GSDP), that is, Rs 37,163 crore was considered for calculation of borrowing space for the first nine months of 2021-22.
But since Andhra Pradesh resorted to over-borrowing of Rs 17,923 crore during the previous years, this amount was adjusted with the available borrowing space of the state.
Interestingly, Andhra Pradesh is repaying the entire loan raised during the period of undivided state before 2014. Telangana in turn reimburses Andhra Pradesh in respect of Telangana's share of repayment related to the pre-bifurcation period.
"In the post bifurcation, it was observed that on redemption of State Development Loan (SDL), Reserve Bank of India, Mumbai, is continuing to debit Andhra Pradesh with the original loan amount. Simultaneously, Andhra Pradesh is credited with the Telangana share of redeemed SDL thereby nullifying the effect of excess debit. This procedure is resulting in inflated figures of receipts and repayments,” the Union finance ministry said.
Thus, it seems that the replacement borrowing allowed to the State of Andhra Pradesh during the past years is inclusive of Telangana's share of repayments.
It may be noted that the combined benefit of replacement borrowings to Andhra Pradesh and Telangana should not exceed the total repayment of loans related to undivided Andhra Pradesh.
“Therefore, an amount of Rs 15,025.03 crore equivalent to Telangana's share of repayment of loan for the period 2016-17 to 2019-20 has been deducted from the available borrowing space of Andhra Pradesh for the year 2021-22, which resulted in lower borrowing space for the State,” the letter said and asked for clarifications from the AP government in this regard.