Andhra Pradesh lacks fiscal discipline, picks debts through NCDs at higher interest rate: Ex-CM YS Jagan Mohan Reddy
YS Jagan Mohan Reddy
has charged that the state government's lack of fiscal discipline and disregard for the constitutional framework has pushed the state into big trouble.
He said that the APMDC NCDs (bonds) were issued at a coupon (interest) rate as high as 9.30%, which is 2.60% higher than the prevailing SDL rate.
In a social media post tagging union finance minister Nirmala Sitaraman and other PMO, Jagan Mohan Reddy alleged that they have learnt that APMDC concluded the second tranche of its NCD (bond) issuance at a coupon (interest) rate of 9.30% and raised Rs. 5,526 crores, taking the aggregate value of the issuance to Rs.
9,000 crores on Wednesday (June, 25).
'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,' said Jagan. He explained that the TDP alliance government, granted private parties access to the consolidated fund of the state through RBI direct debit mandate, owing to which, private parties can access the state exchequer and withdraw funds without any requirement of any action from the state government officials.
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He said that it was a blatant violation of articles, 203, 204 and 293(1) of the Constitution of India.
In a manner unheard of, the govt also mortgaged mineral wealth worth Rs. 1,91,000 crores for NCD (bond) issuances of aggregate value Rs. 9,000 crores.
He said that with permission to access state consolidated fund and mortgage of govt property of disproportionately huge value, one would imagine that these bonds are even more secure than the SDLs (State Development Loans) issued by the state government.
He alleged that the additional yearly burden on the APMDC is to the tune of Rs. 235 crores, owing to the high interest rate and the term of NCDs is understood to be 10 years. With NCD issuance, the total budget and off-budget borrowings availed and secured in this 13-month period by the TDP alliance govt exceeded 50% of what was borrowed by previous govt over a 5-year period.
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