AP Borrowing At Alarming Level: Report

AP finance minister Buggana Rajendranath confirmed that they were planning to borrow from a foreign trust and even approached Union finance minister Nirmala Sitaraman urging the central government to be the guarantor for the deal.

At such a time, the report published by the Credit Ratings organisation warned that Andhra Pradesh was borrowing very heavily, at an alarming-level.

It estimated that in this fiscal, the AP debt-to-GDP ratio would reach 34.6%, which is beyond the 25% limit set by the 14th Finance Commission. Though the neighbouring states of Maharashtra, Tamil Nadu, Karnataka and Gujarat also borrowed heavily, they had ensured that they did not cross the 25 ratio limit set by the Finance Commission.

According to the report, Telangana debt-to-GDP ratio is at 21.4% while that of AP is 13.2% more than that. The Credit Ratings organisation mentioned that even the bigger states like Uttar Pradesh had managed to keep the ratio at 28.8%, West Bengal at 33.3%, Rajasthan at 33.1% and Kerala at 30.1%.

Meanwhile, the organisation also found that even the interest being paid by the AP government on the loans taken was also heavy. In 2021 financial year, AP paid 12.6% as interest and 22.5% towards payment of loans.

The total amount for which the state government has stood as guarantor till this financial year is Rs 49,442 crore.

According to the latest reports, the AP government stands at the 6th position in the list of states which borrowed heavily. It also stated that by this financial year, the state has a loan burden of Rs 3,41,270 crore while neighbouring Telangana has a loan of Rs 1,68,725 crore.