The State Bank of India has sanctioned a loan of Rs 6,000 crores to the Andhra Pradesh State Development Corporation (SDC) 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 two per cent 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 2,58,928a year ago, and is expected to shoot further up to Rs 3,48,998 crore in the current fiscal, as per the Budget estimates.