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CAG: AP may have to borrow more to repay debt

Priya sundarajan | | Updated on: Mar 27, 2013

The Comptroller and Auditor-General of India has observed that Andhra Pradesh will have to borrow more to repay its existing loans and meet debt obligations if the current trends continue.

In a comprehensive report on State Finances for the year ended March 2012, the CAG, dealing with the State’s debt sustainability, stated that to discharge its expenditure obligations, the State Government has to borrow further. This is because there is no fiscal surplus over the last five years.

OBLIGATION

The significant increase in market borrowings at Rs 42,883 crore of the State Government during 2009-10, 2010-11 and 2011-12 could lead to large repayment obligation from the year 2018-19 onwards.

The maturity profile of outstanding stock of State Developmental Loans (SDLs) as on March 31, 2012 shows that 55 per cent of SDLs are in maturity bucket of seven years and above.

The liability of the State to repay the debt would be Rs 9,953 crore during 2015-17 and Rs 21,577 crore during 2017-19. This would put a strain on the Government budget during that period.

Therefore, the CAG observed that a well thought out debt repayment strategy will have to be worked out by the Government to ensure that no additional borrowings, which mature in these critical years, are made.

RESOURCE MOBILISATION

The State needs to step up its resource mobilisation as well as prune unproductive expenditure to maintain debt stability, the CAG felt.

The return on investments in companies and statutory corporations continued to be poor and the rate of return on investments was 0.85 per cent during 2011-12.

The accounts of several corporations have been in arrears. And up to the year of accounts were finalised, the accumulated losses of eleven entities amounted to Rs 5,979 crore.

While AP State Housing Corporation has accounted for Rs 3,554 crore, the AP State Road Transport Corporation with Rs 1,984 crore were leading the list of loss making entities.

SUBSIDY

The total expenditure of subsidies during 2011-12 was Rs 7,313 crore. Of which, rice subsidy was Rs 2280 crore, power Rs 4300 crore and other subsidies Rs 733 crore. While the subsidies increase by Rs 733 crore (12 per cent) over previous year, this was lower that projections made at Rs 10,724 crore.

However, the CAG stated that the State has been achieving the fiscal reform targets every year in the past few years. It registered revenue surplus from sixth consecutive year and the fiscal deficit was within the ceiling prescribed under the Fiscal Responsibility and Budget Management Act.

>rishikumar.vundi@thehindu.co.in

Published on March 12, 2018

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