The State Bank of India has sanctioned a loan of Rs 6,000 crore to the Andhra Pradesh State Development Corporation (APSDC) for taking up various developmental works in the state.
Highly-placed official sources in the government told PTI that the SBI Board cleared the loan proposal on Tuesday.
With its finances under strain, the state government established the AP State Development Corporation (APSDC) on August 27 as a new avenue to borrow more money and channelise donations from different sources.
Money borrowed by SDC will not come under the Fiscal Responsibility and Budget Management Act limits, providing a major relief to the state government as it is set to raise more loans to meet its needs, including payment of salaries.
It approached various banks for borrowing sums between Rs 15,000 crore and Rs 25,000 crore this financial year, stating that the money thus generated would be spent on the fully neglected infrastructure development works.
"Of course, some of the money will be routed for revenue expenditure (welfare schemes) as well, but most of it will be used for capital works only," a top official said.
Income from sale of liquor, the enhanced cess on petroleum products and other taxes hiked in recent months would be escrowed to the SDC as a guarantee for the bank loans, the official added.
The state government has already mobilised about Rs 40,000 crore through borrowing from various sources in the first four months of the fiscal against the target of Rs 48,295.58 crore during 2020-21, official data revealed.
But the figure might overshoot the estimate as the state government is seeking to borrow at least Rs 20,000 crore more, using the 2% enhancement leverage in the FRBM Act limit by implementing a set of Centre-suggested reforms.
Amid roll out of freebie schemes, the state's debt burden has increased to Rs 3.02 lakh crore at the end of March 2020, up from Rs 2,58,928 a year ago, and is expected to shoot further up to Rs 3,48,998 crore in the current fiscal, as per the Budget estimates.
The state government is doling out a staggering sum of over Rs 75,000 crore in cash to different sections of society this year, but an estimated revenue deficit of Rs 18,434 crore and a fiscal deficit of a whopping Rs 48,295 crore have literally left it scampering for cash for the freebie schemes.
The state government has so far imposed Rs 17,000 crore as various taxes, using the reason of "fall in revenues due to COVID-19 lockdown" in the last three to four months.