Objects direct debit clause from the State’s Consolidated Fund
PNS|Vijayawada/Hyderabad
The YSR Congress Party (YSRCP) has raised serious concerns over what it calls “gross financial indiscipline” by the ruling coalition government in Andhra Pradesh. Former Finance Minister Buggana Rajendranath criticised the government’s decision to raise ?9,000 crore through Non-Convertible Debentures (NCDs) issued by the Andhra Pradesh Mineral Development Corporation (APMDC), calling it a “blatant violation of constitutional principles” and a dangerous precedent of fiscal mismanagement.
Speaking to the media on Thursday, Buggana expressed strong objection to the move, particularly the inclusion of a direct debit clause from the State’s Consolidated Fund, which allows private NCD holders to draw funds directly from the Reserve Bank of India (RBI) in the event of a default. “It bypasses the legislative processes outlined in Articles 203 and 204 of the Constitution and violates Articles 293(1) and 293(3), which govern State borrowings,” he said.
He further stated that mortgaging APMDC’s future revenues and the entire portfolio of minor mineral rights across Andhra Pradesh was an unprecedented step that puts public resources at risk. “APMDC, which has limited capital expenditure needs as mining operations are largely outsourced, is being pushed into unsustainable debt to finance the government’s revenue expenditure,” he said.
The former minister noted that following this issuance, APMDC’s total debt will exceed ?10,000 crore, and its debt-to-EBITDA ratio will surpass 8.25x, raising red flags about the corporation’s long-term financial health and autonomy. “The government is essentially using APMDC as a proxy to raise off-budget liabilities while bypassing constitutional safeguards,” Buggana added.
Buggana pointed out the irony that when the previous YSRCP government pledged properties for borrowing, the now-ruling coalition parties had strongly criticised it.
