Overdraft Dues; AP Racing Against Time!

The Andhra Pradesh government is racing against time to clear the OverDraft (OD) dues related to the Reserve Bank of India (RBI). Having knowledge of AP’s debts, the government of India has restricted the AP government from taking further loans.

In January AP CM YS Jagan met PM Modi and FM Nirmala Sitharaman and managed to get an additional loan of Rs 2000 crore. However this loan had restrictions with RBI’s OD limit. If the OD limit breaches Rs 1400 crore, the central bank would announce bankruptcy but the AP government has close to Rs 2500 crore OD.

The OD needs to be cleared to the RBI in the first week of every month and with less time in hand, state finance secretary KVV Satyanarayana flew to New Delhi on Friday morning. He reportedly applied for an indent of 2000 crore even before receiving any formal approvals for fresh loans from the Centre. Late Friday night, secretary Satyanarayana received a letter from the GoI permitting for the indent.

This would permit the AP government to take part in RBI’s security auction and borrow additional Rs 2000 crore. Ironically the same amount has to be paid to the central bank yet the state government will have a deficit of Rs 500 crore OD.

Overall, the AP’s financial position is really in a very bad shape.