Right from the day of coming to power in Andhra Pradesh, YSR Congress party president and chief minister Y S Jagan Mohan Reddy had been expressing concern over the poor financial position of the state.
He even brought out a white paper immediately after coming to power to show that his predecessor and Telugu Desam Party president N Chandrababu Naidu had ruined the economy of the state by going in for borrowings left, right and centre, thereby pushing the state into a debt trap.
This was confirmed in a latest revelation by the State Bank of India, the country’s largest public sector banks.
In a letter written to the Andhra Pradesh Power Finance Corporation Limited last week, the bank raised several doubts over the repayment capacity of the Corporation and the credibility of the guarantee offered by the state government.
The power finance corporation filed an application before the bank seeking a term loan of Rs 3,000 crore for taking up various projects in the state. But the bank expressed doubts over the financial health and credibility of the state.
The bank said Andhra Pradesh had a high-level of outstanding debt of Rs 2.52 lakh crore (financial year 2018-19) and that is expected to rise to Rs 3 lakh crore in 2020.
The outstanding guarantees of the state have also witnessed a sharp rise from Rs 9,665 crore in 2017 to Rs 35,964 crore in 2018, resulting in higher committed expenses for the government”, the SBI pointed out.
Considering the exceptional rise in outstanding debt as well as in outstanding guarantees, the capability of the AP government to honour its obligations by payment of actual cash rather than substitution by another instrument needs examination, the SBI said.