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Lok Sabha election high over, YSR party now in a fix: How to fund campaign promises?

Today, the big question for YSRCP MLAs and MPs is this: Where are the funds to pay for the welfare schemes and cash doles that Jagan has promised?

Written by Sreenivas Janyala | Hyderabad | Updated: June 6, 2019 7:18:24 am
Lok Sabha election high over, YSR party now in a fix: How to fund campaign promises? Andhra’s debt in 2019 stands at Rs 2.97 lakh crore.

Despite its landslide victory in the state and general elections last month — 151 of 175 Assembly seats and 23 of 25 Lok Sabha seats — Y S Jagan Mohan Reddy’s YSRCP has been subdued in its celebrations. There have been no victory laps or grand speeches in Andhra Pradesh except for Jagan saying that “God and people have taught (TDP chief) N Chandrababu Naidu a lesson”.

The reason for this restraint, say party leaders, is the precarious financial situation of the state, which was saddled with a revenue deficit of Rs 16,200 crore in 2014-15, the first year after its bifurcation in June 2014. The state had enjoyed a revenue surplus over the previous eight consecutive years.

Today, the big question for YSRCP MLAs and MPs is this: Where are the funds to pay for the welfare schemes and cash doles that Jagan has promised? “The strong mandate implies that people have huge expectations, and trust Jagan to fulfil all his promises. If people can give such a crushing defeat to Babu (N Chandrababu Naidu) for failing to fulfil his promises, they can do the same to YSRCP if it doesn’t deliver. The state’s weak fiscal position presents a huge challenge in implementing the schemes. This is a major worry,” a party leader said.

On May 26, when Jagan was in Delhi to meet Prime Minister Narendra Modi, he had pointed out that Andhra’s debt in 2014 was Rs 97,000 crore, which has more than tripled to Rs 2.97 lakh crore in 2019 with over Rs 40,000 crore being paid as annual interest alone.

Lok Sabha election high over, YSR party now in a fix: How to fund campaign promises? Andhra CM Jagan’s promises

Senior YSRCP leader Botsa Satyanarayana said the new state government will have to find new avenues to boost revenue. “We also have to work on the FRBM (Fiscal Responsibility and Budgetary Management) Act, and bring down the total debt to within borrowing limits again. We may have to seek loans from the World Bank and other institutions to fund schemes,’’ he said.

Government officials said that with a debt of Rs 2.97 lakh crore, the state was in no position to get further loans, having already breached the limit of 3.5 per cent of Gross State Domestic Product as per FRBM. Andhra’s borrowing is now 5 per cent of GSDP, as per April 2019 estimates, they said.

Explained: Andhra Pradesh, Telangana — two states, two election stories

Rough estimates by officials and YSRCP leaders suggest the state would need about Rs 50,000 crore in five years to implement Jagan’s “Navaratnalu” — the nine promises of YSRCP.

This is apart from implementing existing schemes started by the previous TDP regime, and funding the Polavaram project, construction of the capital city Amaravati, minor and medium irrigation projects, and the Metro rail in Vijayawada and Visakhapatnam.

After the huge victory, Jagan rushed to New Delhi even before taking oath to meet the Prime Minister to seek financial help and press for Special Category Status (SCS) to Andhra Pradesh. “I will make as many trips as possible to New Delhi to meet the PM to seek SCS and financial help,’’ Jagan said.

At the same time, he resolved to implement his party’s promises and bring back ‘Rajanna Rajyam’ — a reference to the welfare state under his late father and former Chief Minister Y S Rajashekara Reddy.

The previous TDP regime could not fulfil the promises of loan waiver due to the financial crunch post bifurcation. According to former Finance Minister Y Ramakrishnudu, Andhra was left with a deficit in 2014-15 of Rs 16,200 crore. As per the AP Reorganisation Act 2014, the Centre was supposed to reimburse Rs 22,113 crore towards compensating the revenue gap and a special package of Rs 1,050 crore per annum for seven backward districts.

However, the Centre reimbursed Rs 3,979 crore for 2014-15 and Rs 1,521 crore in 2015-16 to compensate for the revenue gap, and granted Rs 1,050 crore for 2014-15. It delayed payments after 2016 as relations between the BJP and TDP deteriorated over SCS. “In 2018-19, we barely managed to pay salaries to government staff and the annual compensation to farmers who gave land for the capital city’s construction,” a Finance Department official said.

Read | Jagan Reddy lifts curbs against CBI, orders review of contracts

A day after taking oath as Chief Minister, Jagan enhanced pensions for senior citizens from Rs 2,000 to Rs 2,250, to be hiked to Rs 3,000 over the next four years. Asking IAS officers to come up with new ideas to increase state revenues, he sought their opinion on levying a green tax on industries producing large amounts of waste, and garbage tax on commercial establishments and hotels. He also called for a new sand mining policy to curb illegal mining and increase revenue.

“The CM has also asked officials to prepare a comprehensive report on AP’s finances to be submitted to the 15th Finance Commission, and make a case for additional central grants and special category status,” an official said.

Principal Secretary (Irrigation) Sashibhushan Kumar said the state has spent Rs 11,537 crore so far on the Polavaram project and the Centre has to reimburse Rs 4,810 crore. The project requires about Rs 12,000 crore for completion of civil works and another Rs 27,000 crore towards the rehabilitation and resettlement package. While the estimated cost of constructing Amaravati is over Rs 40,000 crore, the state has so far spent about Rs 3,000 crore in government complexes and housing, with the Centre reimbursing only Rs 1,500 crore so far.

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