The Center gave a huge shock to the AP government. It also imposed restrictions on debt and imposed sanctions. With these developments, the AP government has become a must to increase revenue. This has created a situation where it is imperative to change the way welfare schemes are implemented based solely on tax collection and debt without creating wealth to cover expenses. The CAG has also made these suggestions, especially as several financial institutions and agencies have already issued warnings regarding the AP government’s debt. It also issued indirect warnings on the implementation of unrestricted welfare programs without revenue streams. In the wake of this, the Centre left its arrow on the AP government. The Finance Ministry has sent a four-page letter to the Chief Secretary of the State Finance Ministry stating the net credit limit as per the recommendations of the 15th Finance Commission.
Net debt accounts for only 4 per cent of the state’s GDP
Briefly about the limit imposed by the Center. The Finance Commission has suggested that the net debt should be only 4 per cent of the state’s GDP in any financial year. Accordingly, this net credit limit is applicable excluding repayable debt from the total loan taken in a financial year. The GDP in AP has been estimated at Rs 10 lakh 61 thousand 802 crores for the financial year 2021-22. Accordingly, the net limit for the state is Rs 42,472 crore. It turned out that he could not make any more debts. Here are 2 more rules. According to one of the terms. This loan includes private companies, companies like NABARD, PF, small amounts, bonds all meet. This means that this restriction applies to any form of borrowing. According to the second rule, the debt limit for AP is exactly Rs 42,472 crore. 27, 589 The Center decided to spend the investment. That means those investments will be in the renewable sectors. This means that only about Rs 15,000 crore will be available to the state. These restrictions state that states must not rely on state revenue.
Exceeding beyond limits
According to the recommendations of the Finance Commission, the Finance Commission has also recommended a cut in the net credit limit if the investment cost is not within the prescribed amount. The centre is also preparing for it. In the absence of investment expenditure of Rs 27,589 crore in 2021-22, 0.50 per cent of GDP, or Rs. More than Rs 5,000 crore will not be deducted. It also directed the state governments to submit two types of reports by the end of April on the items borrowed from the 2017-18 financial year, repayment of loans, net debt, losses on power disks in the state, state share, other loans, fund adjustments etc.
