Since coming to power in April 2019 the YSRCP-led Andhra Pradesh government has availed a sum of Rs 56,076 crore as loans from various public sector banks, the Union government told the Rajya Sabha on Tuesday, August 10. Andhra Pradesh has availed its largest loan of Rs 15,047 crore from the State Bank of India.
The Minister of State in the Ministry of Finance, Bhagwat Karad was responding to the question posed to the Ministry of Finance (MoF) by the Member of Parliament, Kanakamedala Ravindra Kumar of the Telugu Desam Party (TDP). The MP had sought details on loans availed by the Andhra Pradesh government from banks since 2019. In response, the MoF clarified that new loans to state governments are issued by the Reserve Bank of India (and not by the banks) in RBI's capacity as a banker to the government. The MoF stated that this is as per the provisions of clause (b) of sub-section (1) of section 21A of the Reserve Bank of India Act, 1934.
In June, this year, the Andhra Pradesh government had run into trouble with the MoF, over financial irregularities while availing loans from banks. The state had months prior informed the MoF that it had availed loans worth Rs 18,500 crore. These loans were taken from banks through the Andhra Pradesh State Development Corporation (APSDC). The YSRCP government took these loans by pledging its future tax revenue for the 2020-21 financial year.
The MoF had then pointed out that pledging state assets to banks was not prima facie constitutional and sought comments over the alleged financial violations. The issue was first pointed out by retired former Chief Secretary of Andhra Pradesh, IYR Krishna Rao. The YSRCP rebel Member of Parliament Raghu Rama Krishna Raju Kanumuru also wrote to the MoF and to Prime Minister Narendra Modi alleging financial irregularities by the Andhra Pradesh government. The state already has a debt burden of Rs 3,73,140 crore as of November 2020.
Apart from State Bank of India, Andhra Pradesh has availed loans from Bank of Baroda worth Rs 9,450 crore, Rs 7,075 crore from Bank of India, Rs 6,800 crore from Union Bank of India, Rs 5,797 crore from Punjab National Bank, and Rs 4,300 crore from Indian Bank. As well as loans worth Rs 2,800 crore from Bank of Maharashtra, Rs 2,307 crore from Central Bank, Rs 1,750 from Indian Overseas Bank and Rs 750 crore from Punjab and Sind Bank.