VIJAYAWADA: Despite the huge fiscal disability due to the cyclical slowdown in 2019-20 and the Covid-19 pandemic in 2020-21, the state government has not compromised on delivering on its commitments made to people, said Krishna Duvvuri, Special Secretary (Finance and Economic Affairs) to Chief Minister. He blamed the non-fulfillment of commitments made to AP during bifurcation and also the ‘misgovernance and expenditure profligacy of the previous TDP government’ for the undue swelling of liabilities of the state.
Speaking to mediapersons Wednesday, he said the government believed that during the devastating time of loss of livelihoods, the only way to protect the people from utter distress is through direct benefit transfer.
“Not only has the government succeeded in putting money in the hands of people in an objective and transparent manner to help them in the hour of crisis, but also ensured that there are no hiccups in implementing programmes such as Nadu-Nedu in health and education, which are to benefit the future of the state,” he said.
Taking strong exception to a misleading and misinformation campaign by the Opposition with regard to state finances and borrowings, Krishna clarified that like any other state or country, Andhra Pradesh too had borrowed, but within limits and its debt during the two financial years was lower than that of the Centre. As on March 31, 2021, the Centre’s debt growth was 37.24 per cent and debt compound annual growth rate (CAGR) was 17.15 per cent, while the AP’s debt growth was 32.84 per cent and the debt CAGR was 15.26 per cent, he said. 5
‘State got Rs 28,242 cr against Rs 34,833 cr from Centre’
Elaborating further, he said the entire country was in the grip of cyclical slowdown in 2019-20 and the growth of Union tax revenue for that fiscal was the lowest in the last two decades. It was an unprecedented -3.38 percent. In the subsequent financial year, the entire world was in the grip of Covid-19 pandemic, the worst catastrophe ever. “There was loss of economic buoyancy, aggregate demand, livelihoods and most damaging of all, there was a huge loss of lives. The entire world was faced with a scenario of steep fall in revenue coupled with the urgent need to step up public expenditure,” he said.
When the public final consumption expenditure takes a nosedive, it is essential to step up the government consumption expenditure to ensure that the fall in GDP of the country is addressed, at least to a certain extent. Further, public expenditure is imperative to save lives during this unprecedented crisis, he explained.
Krishna said for this very reason, not only India, but governments across the globe had to indulge in heavy borrowing to ensure adequate public spending in the light of falling revenues. The Centre’s debt to GDP increased to 59.72 percent and borrowings to GDP rose to 11.10 percent in the previous fiscal. “It goes without a fact that the Centre’s resolve to not compromise on public spending protected the country during the difficult times,” he said.
Elaborating on the state government’s borrowings, the Special Secretary said the state was also impacted by the cyclical slowdown in 2019-20. Against the expected Rs 34,833 crore as its share in Central taxes, it had received only Rs 28,242 crore and it also witnessed fall in its own revenues. In 2020-21, the outbreak of Covid-19 had the most damaging impact on the state finances.
“The state had lost Rs 7,780 crore in its share in Central taxes, Rs 7,000 crore on account of own revenues and moreover, it had to incur Covid related expenditure to the tune of Rs 8,000 crore. If the loss on account of total economic impact was to be taken into consideration, it would be much more,” he said.
At the time of bifurcation, Andhra Pradesh’s share of debt was Rs 97,123 crore and when public account share was added, it was Rs 1,20,556 crore. The same increased to Rs 2,68,225 crore in the TDP regime. “Due to TDP’s misgovernance, the state had to endure the burden of additional liabilities.
Outstanding payables on March 31, 2019 were Rs 39,000 crore. The off-budget borrowing was Rs 58,000 crore as against Rs 14,028 crore in 2014-15. The debts of power sector corporations increased from Rs 33,587.98 crore to Rs 70,254 crore. In addition, dues by Discoms to power generators increased from Rs 2,893.23 crore to Rs 21,540.96 crore. The debt servicing cost of the power sector alone was more than Rs 1.2 per unit of electricity,” he said.
Pointing out that heavy borrowing took place in the State during a time when the level of increase in debt was not witnessed anywhere else in the country, he said the debt of the Centre had increased at a compounded annual growth rate of 9.78 percent in 2014-19 while the debt of the state for the same period had increased at a CAGR of 17.33 percent. “Had this borrowing supported productive expenditure, various sectors in the state would have been substantially improved, but that was not the case,” he said. Owing to the misgovernance during 2014-19, sectors such as agriculture, health and education had fared poorly.
“NABARD All India Rural Financial Inclusion Survey, 2016-17 indicated that indebtedness amongst agricultural households in AP was as high as 77 percent, compared to the national average of 47 percent. With respect to education, the Gross Enrolment Ratio for AP in primary education was amongst the lowest in the country at 84.48 as against the national average of 99,” he said.