Discrepancy in the calculation of the Gross State Domestic Product (GSDP) by the AP government and the central statistical office has pushed the former into a tight corner with the Centre putting on hold the state’s request to raise more funds from financial institutions. While the AP government pegged the GSDP at Rs 6,95,000 crore, the Centre in turn crosschecked the figures with the central statistical office, which has put the figure at around Rs 6,32,000 crore. The difference between the AP’s claim and the Centre’s calculation has resulted in the latter withholding permission to raise funds from financial institutions.
State finance department officials fear that the discre pancy will dent the total market borrowings by about Rs 1,500 crore. They are making last minute efforts to get clearance for the figures submitted by the state government.Officials of the planning department have made it clear that the GSDP figures were calculated by the economics and statistics wing and there is no discrepancy whatsoever in the figure. They have asked the Centre to approve the GSDP as projected by the state. With the Centre ruling out special status category to the state, the AP finance department is now exploring alternatives to bridge the revenue deficit. Citing Section 46 (1) and (2) of the AP Reorganization Act, 2014, the finance department wrote two letters to the Union finance ministry seeking special assistance.
It has also sought special permission to raise loans from the open market to the tune of Rs 3,500 crore, pending decision on the fiscal responsibility and budgetary management (FRBM) exemption. The state has been demanding enhancing of the loan raising capacity to 3.5 per cent from existing 3 per cent of the GSDP . But the demand was turned down by the Centre citing FRBM norms.
Now, in the absence of special status, the state government decided to insist on relaxation of FRBM rules so that it could go for additional market borrowings and bridge the revenue deficit. “This is a vicious circle. If the state is reeling under revenue deficit, it would not be eligible to raise more loans. To bridge the deficit, we have to ramp up the revenues or raise loans for which the FRBM rules come in the way . To come out of this circle, we want relaxation of the FRBM rules that would give us some leverage in the present crisis-like situation,“ said a senior official in the finance department.
Chief minister Chandrababu Naidu has decided to meet Prime Minister Narendra Modi and Union finance minister Arun Jaitley next week to press for special financial assistance to tide over the crisis. He would also seek approval for the GSDP figures submitted by the state government to the Niti Ayog.
Source: Times of India – Hyderabad Edition