The Telugu Desam Party (TDP) leader alleged that in the past three-and-a-half years, Reddy “totally devastated the state with no development in any corner.
Former finance minister of Indian state of Andhra Pradesh, Yanamla Ramakrishnudu has warned that the state could soon turn into another Nigeria if Jagan Mohan Reddy continues as the chief minister.
Andhra Pradesh is a state in the south-eastern coastal region of India. It is the seventh-largest state by area covering an area of 162,975 km² and the 10th most populous state with 49,386,799 inhabitants.
Ramakrishnudu, a senior leader of Telugu Desam Party (TDP), noted that with the economic situation in the state, with development coming to a standstill and the people bearing heavy financial burdens, it will not be a surprise if Andhra Pradesh turns into another Nigeria or Zimbabwe, Indo-Asian News Service reports.
The Telugu Desam Party (TDP) leader alleged that in the past three-and-a-half years, Reddy “totally devastated the state with no development in any corner.
“Several people who were in various kinds of professions lost their livelihood as he pushed Andhra Pradesh into a serious crisis,” Ramakrishnudu said.
“If similar situation continues for some more time, the state will witness unimaginable catastrophe,” he stated.
The latest Comptroller and Auditor General (CAG) report indicated that the total debts of the state reached abnormal levels.
The state revenue has also dropped and the GSDP level has fallen to a single digit, he pointed out.
The total debts are not indicated in the budget thus taking the people for a ride, the former finance minister said.
The 15th Finance Commission has pulled up the state government on these issues, he said, adding that in the past three-and-a-half years, the state government’s borrowings touched a whopping Rs 8 lakh crore following which the state has to pay over Rs 50,000 crore as interest.
The former minister expressed serious concern that the interest amount may rise to Rs 1 lakh crore soon and asked how development would be possible when so much amount is paid as interest alone.
“What is more dangerous is that major share of amount, almost 81 per cent, raised as loans is going as revenue expenditure,” he said.
Ramakrishnudu recalled that earlier investments in the state were very high following which employment was generated and job notifications too were issued.
Special incentives were also extended for women in the shape of DWCRA loans generating employment for them and SCs and BCs too were given loans to set up units. But now the situation is different and generating employment is rare, he said.
In fact, those who have earlier come forward to set up their units in the state are now withdrawing their investments totally reversing the atmosphere in the state, the TDP leader said.
He alleged that the Jagan Mohan Reddy government is following the policy of increasing the borrowings pushing the state into a deep crisis.
As per the FRBM Act, the state’s total debts should not cross 35 per cent of the GDP but the burden of the state in 2021 itself crossed 44.04 per cent.
Ramakrishnudu felt that the state government should realise the factual position and take urgent measures to prevent the state from moving into a financial emergency.
The economic fortunes of Nigeria under President Muhammadu Buhari-led Federal Government have worsened with the government borrowing to pay salaries.
Former acting accountant-general of the federation (AGF), Anamekwe Nwabuoku, in June lamented that an increase in government expenditure due to rising security challenges and the social needs of the citizenry had forced the government to borrow to pay salaries.
Nwabuoku said “we have to borrow to augment payment of salaries and wages. This shows we are in very difficult times. Government income is highly challenged.”
The West African country's borrowing rate according to data from the Nigeria Bureau of Statistics (NBS), shows that Nigeria Bank Lending Rate data updated monthly is averaging 16.590 % pa from January 2006 to July 2022, with 199 observations. The data reached an all-time high of 19.660 % pa in November 2009 and a record low of 11.130 % pa in March 2021.
The government’s increasing reliance on internal and external borrowing to finance its operations has been observed as one of many dangers threatening the very foundation of the Nigerian state. Recently, various international organisations, private entities, senior government officials, and former government functionaries have decried the Buhari administration’s appetite for borrowing and warned about the risk to the Nigerian state of allowing the situation to get out of hand.
These include the International Monetary Fund (IMF), which projected that “the Nigerian government may spend nearly 100 percent of its revenue on debt servicing by 2026".
The World Bank warned that the country’s debt, while seemingly sustainable, is “vulnerable and costly”.
According to the Nigerian Economic Summit Group (NESG), a body of private sector leaders, there is a prospect of creating “a debt burden for future governments.”
Between 1999 and 2021, local and external federal government borrowings jumped from N3.55 trillion to N26.91 trillion, an increase of 658 percent.
Last month, Minister of Finance, Budget and National Planning, Zainab Ahmed, revealed that, at N1.94 trillion, the cost of debt servicing had surpassed the government’s retained revenue of N1.63 trillion, leaving it N300 billion in the hole.