Did RBI Turn Down Jagan Sarkar’s Loan Plea?

With welfare schemes beyond capacity and expenditure beyond income, Andhra Pradesh’s financial situation is worsening at the moment. The state’s income has taken a huge blow due to the Coronavirus pandemic and the real estate has been hit too.

In one word, if the welfare schemes are implemented, the state cannot afford to pay salaries to government employees and if the salaries are paid, the welfare schemes cannot be implemented. As of 6th April, only 35 per cent of the total state government employees have been paid their salaries and that too with borrowed money. On the other hand, Jagan sarkar has said it could not pay salaries due to a series of bank holidays.

In this scenario, the Reserve Bank of India (RBI) turning down AP government’s request to borrow Rs 2,000 crore from the open market to have cash reserves has become a hot topic. The RBI has told the Jagan sarkar that it would let the state government to participate in the securities auction only after it gets the union government’s approval.

On Tuesday, the Andhra Pradesh government had raised Rs 2,000 crore through bonds auction to pay salaries to the rest of the employees. However, with the RBI blocking the move, the state finance ministry is worried about the salaries to employees and pensions to the retired employees.

The state’s economy is in such a situation where the daily income is sufficient to only pay the salaries in installments. In that case, implementation of the government welfare schemes has become a million dollar question. We have to see how CM Jagan will overcome this huge challenge.