Borrowing money in whatever form and whatever method is not a great achievement for any person or an institution or for that matter a government.
There is nothing wrong in taking loans – even big business tycoons like Ambani take loans either in the form of public borrowings or private borrowings like commercial banks. But the burden of loans falls only on the companies and not the common man.
But if a government takes loans for any purpose, the burden will be definitely on the tax payers. Of course, all the governments, including the Narendra Modi government at the Centre takes loans from various agencies like the World Bank and DFID, besides going in for public borrowings.
But getting loans is not an achievement for the government, but in a way, it shows the financial compulsions of the government.
But, the Telugu Desam Party government in Andhra Pradesh headed by chief minister N Chandrababu Naidu is feeling as if borrowing loans is also a big achievement and is seeking publicity for the same.
On Wednesday, media was bombarded with official statements about how his government raised Rs 2,000 crore through issuance of “Amaravati bonds” for mobilising funds for the construction of green-field capital city of Amaravati.
Andhra Pradesh Capital Region Development Authority (APCRDA) proposed to raise Rs 1300 crore through issuance of bonds.
“But within one hour of the issue on the Electronic Bidding Platform (EBP) of Bombay Stock Exchange (BSE) the issue received oversubscription by 1.53 times, fetching more than Rs 2,000 crore,” CRDA Commissioner Cherukuri Sridhar said.
The government claimed it as a major achievement, as no civic authority in the country had mobilised so much money. One wonders how borrowing loans from people can be a big achievement.
When the government is paying a fixed interest rate of 10.32 per cent which would be paid quarterly, compared to around 9 per cent by Nabard and other nationalised banks, anybody would come forward to buy these bonds, as infra bonds would also fetch tax rebates, apart from high interest.
Moreover, the principal would be repaid on yearly basis for next five years at a 20 per cent interest rate after the completion of 10-year moratorium. And the bonds have the state government guarantee. Naturally, it would attract the lenders.
So, what is so great about it?