With the Andhra Pradesh government indulging in indiscriminate borrowing of loans from the open market to fund its welfare schemes, the NDA government imposed a major cut in the borrowings on the pretext that heavy borrowings would result in financial crisis in the coming years.
A letter to this effect was written by Union finance ministry official Sumit Agarwal to state principal secretary (finance) S S Rawat a couple of days ago.
It was only last week that state finance minister Buggana Rajendranath, along with his department offcials, met Union finance minister Nirmala Sitaraman requesting her to allow the state to go in for more borrowings.
According to the reports, the Union finance ministry has restricted the borrowing limit of the state to only Rs 27,668 crore, though it was initially estimated as per the Gross State Domestic Product for 2021-22 that the state could borrow up to Rs 42,472 crore.
The state government submitted a report to the centre in April on the loans taken by the state in the last two years. The Union finance ministry authorities made a thorough study of the state’s borrowings and decided to impose major cuts in the borrowing limits.
It said the borrowing limit would be increased by another 0.5 per cent after the state government spent the entire amount earmarked under capital expenditure in the budget to the tune of Rs 27,589 crore.