National & International Financial analysts and reputed Economists have stated that the massive Financial crisis in AP is not the result of any conflict, natural disaster or sanctions but purely the consequences of populist policies and corrupt practices that began under the Congress rule and continued under the TDP administration.
The crisis has affected the life of the average citizen in Andhra Pradesh at all levels. By 2014, the crisis had escalated to the point where almost 70% of the population was below the poverty line, but fed on liquor and freebies.
- Two rupees per kg of Rice:
- Free Electricity
- Free Medical Insurance
- Free Education
- Free Health care
- Agricultural loan waivers..
More than half of population did not have enough income to meet their basic living needs, but still refuses to go to work due to support from AP govt schemes.
It was estimated in March 2019 that 80% of citizens expect to live with support from a bankrupt Government.
More than 50% of educated and intelligent people have left the state and country for better prospects. Estimates in 2019 found that 25% of citizens depend on some form of humanitarian assistance.
Andhra Pradesh led the whole country with the highest FRBM limit of 3.5 to borrow more to survive.
By August 2019, the state had a record default in payments for all completed works and had to pay about 25,000 crores.
Financial Support to free education and health was stopped from over a year due to lack of funds..but private institutions were forced to support these schemes leading to bankruptcy.
Construction came to a grinding halt. Lack of land allocation policy rendered lakhs without jobs.
Payments for various contractors were on hold for 6 months leading to sickness of companies and NPA increase in banking sector.
Corrupt bureaucrats forced the AP govt in 2014 to give a 40% pay hike with no relevance to performance.
Pensions were hiked by 100 %. Free food was started in 2018 by Anna canteens.
Free cash was distributed to female voters which amounted to 20% of state earnings, without earning it.
Borrowings shot up to 2.5 lakh crores.
Interest payments alone came to 25,000 crores. AP State borrowed further every year only to repay interest on loans.
A new govt came to power in 2019 and promised more freebies to the tune of 50,000 Crores, equal to their annual state revenues from all sectors, whereas the state revenues in 2018 were 55,000 Crores.
The new govt in AP promised a budget of 2.2 lakh Crores with estimated new borrowing of 50,000 Crores and showing additional discretionary grants from central govt to tune of 60,000 Crores in addition to central share of taxes of 35,000 Crores.
A huge wage bill of 50,000 Crores, Pensions of 12,000 Crores and interest payments of 25,000 Crores, took care of entire revenue of state and central share of taxes.
The state officially states it needs borrowing and grants of 1.1 lakh Crores from centre per year to survive.
No new funds are available to any development activities.
All projects have come to grinding halt. Alleging corruption even Central funded projects were stopped.
Economy of the State had suffered badly.
Global recession and high unemployment added to this loss of revenue. Investments promised to tune of 10 lakh Crores remained on paper for over 3 years. All investors ran away.l this w
Alas to gain political popularity. To remain in power, impossible promises we’re made to the people.
Reservations were increased. Merit suffered. Freebies increased. Revenue suffered. Pro poor image of the Govt made investors run away. Lack of employment and a severe recession with a Govt that has not paid bills to contractors for over a year.
Thus far, Andhra Pradesh is a Venezuela already in the making! (The author is a former bureaucrat)