Andhra lacks fiscal discipline, picks up debts through NCDs at high interest rate: Ex-CM YS Jagan Mohan Reddy
YS Jagan Mohan Reddy
has accused the current
Andhra Pradesh government
of financial mismanagement. He claims the state is in trouble due to a lack of fiscal discipline and disregard for the Constitution. Reddy highlighted the Andhra Pradesh Mineral Development Corporation's (APMDC) issuance of
Non-Convertible Debentures
(NCDs), or bonds, at a 9.30% interest rate. He stated this is 2.60% higher than the prevailing State Development Loan (SDL) rate.
In a social media post addressed to Union Finance Minister Nirmala Sitharaman and the Prime Minister's Office, Reddy said that APMDC concluded its second NCD issuance, raising Rs 5,526 crore and bringing the total to Rs 9,000 crore on Wednesday, June 25.
— ysjagan (@ysjagan)
According to Jagan, 'The govt went ahead with the issuance of NCDs despite the matter being admitted by the AP High Court and notices served. It is quite apparent that the proceeds of the issuance would be utilized for financing government revenue expenditure.'
Reddy explained that the current government is allowing private companies to access the state's consolidated fund through a
Reserve Bank of India
(RBI) direct debit mandate. He argues this allows private parties to withdraw funds from the state treasury without state government official oversight. He believes this violates articles 203, 204, and 293(1) of the Constitution of India.
Reddy also criticised the government for mortgaging mineral wealth worth Rs 1,91,000 crore for NCD issuances totaling Rs 9,000 crore.
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He estimates the high interest rate will add Rs 235 crore to APMDC's yearly expenses, with the NCDs having a 10-year term. He claims that the current government's borrowing in the last 13 months has exceeded 50% of the borrowing done by the previous government over five years.
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