Active and retired Andhra Pradesh employees do not receive wages and pensions on the first of every month for a period of time – an unusual feature that exposes the state’s economy to stress.
For some time now, serving and retired government workers in Andhra Pradesh have not received wages or pensions for the first of the month.
A few months ago, IYR Krishna Rao, who retired as Chief Secretary of Andhra Pradesh, tweeted: “This month’s pension has come. [to me] well after a week. Wages [for government employees], retirement [for the retired personnel] and interest on debts is paid one day before or after the first of each month as obligatory in accordance with the allowances made in the budget which obtains the approval of the Legislative Chamber each year. But the delay in paying pensions paints a grim picture for the state’s economy. “
The case of the former IAS officer is indicative of the state’s perilous economic situation.
The Yuvajana Sramika Rytu Congress (YSRC), led by Jaganmohan Reddy, came to power in 2019 with the promise to implement nine social protection programs, dubbed “Navaratnalu”. Regardless of the financial situation of the divided state, Jagan made big promises during the election campaign, and the so-called Navaratnas were thus high on the agenda once he became minister in chef in May 2019.
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Among them, YSR Rytu Bharosa, who promises every farmer ??50,000 over four years; reimbursement of fees for students; Amma Vodi, under which the parents of every school child get ??15,000 each academic year; YSR Asara, who promises to renounce ??20,000 crores owed by women in self-help groups; and pension pempu – ??16,000 crore for the welfare of the elderly and disabled. The nine diets together are very expensive ??40,000 crore annually, according to official information.
After riding CM for 27 months, Jagan, 49, finds himself between the devil and the deep blue sea. Rising spending on the one hand and declining income on the other forced the government into a borrowing frenzy to close the gap.
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According to the Andhra Pradesh Economic Survey 2020-21 report, industry and service sectors, the main sources of income, recorded negative growth of -3.26% and -6.7% , respectively. Negative growth in both sectors resulted in negative growth of GSDP (State Gross Domestic Product), which was recorded at -2.58% over the same period.
The scenario was the same in 2019-2020 as well. The drop in income has been attributed to slow industrial growth due to Jagan’s alleged accusatory policies, among others.
Jagan and Chandrababu: a parallel
The YSR Congressional 27-Month Rule highlights the conflicting welfare development models of Jagan and his pet peeve, N Chandrababu Naidu of the Telugu Desam Party. After winning the election, Jagan sought to present himself as a messiah of the poor. Naidu, after taking over the reins from his father-in-law NT Rama Rao in 1985, tried to divert the economy from the social protection model towards a development model. Reforms initiated by Naidu in the agriculture and power sectors cost him his job and he lost power to YS Rajasekhar Reddy, Jagan’s father, in 2004.
“Naidu put the state economy back on track after the NTR era, which initially ushered in the era of gifts such as ??program of 2 per kg of rice and subsidized electricity for agriculture, ”said IVR Krishna Rao, the state’s first chief secretary branched off with a shift under the previous TDP regime. Federal. Under the new exemption, the state’s economy is now on the verge of collapse, he said.
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YSR won two back-to-back elections, in 2004 and 2009, promising free power for farmers, reimbursement of fees for students, and other freebies.
Later, Naidu, in an attempt to turn the tide in his favor, leaned too lightly towards welfare by struggling hard not to jeopardize his mission to rebuild the Truncated State during his last stint as CM in 2014-19. It has endeavored to promote industries, dam construction and infrastructure projects as part of the business.
Industries on the back foot?
As the first ruler of the divided state, Naidu went the extra mile to create an enabling environment for the industry by hosting a series of investor summits in Visakhapatnam, signing memoranda of understanding with potential investors from the inside and outside the country.
Naidu’s industry initiatives and incentives have paid off, as auto majors like Kia Motors, Isuzu, and Hero Honda have established operations in the state. Celkon, a consumer mobile phone brand, and Franklin Templeton, an investment firm, also opened operations in Renigunta and Tirupati, respectively.
Almost all of these companies, with the exception of Kia Motors, went out of business for lack of a favorable investor environment under the new waiver. According to a source from the Andhra Pradesh Economic Development Board (APEDB), during the Naidu regime, investors signed memoranda of understanding worth ??10 lakh crore. Following the change of government, these memoranda of understanding became worthless, the source said.
An industry representative from Visakhapatnam, requesting anonymity, said Federal that no notable investor stepped forward to invest in the state after the YSRC came to power. The Adani group is the only exception.
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In November 2020, Adani Enterprises offered to invest ??14,634 crores for the creation of an integrated data center park, recreation center, integrated computer and business park and skills development university in Visakhapatnam. But the proposal has not yet taken off.
Debt that gets worse
Confronted with a mismatch between revenue and expenditure, the state must depend on borrowing to meet the heavy expenditure of social programs. As a result, it is estimated that the budget deficit will increase to 5.38% of the GSDP over the period 2021-2022, well above the 5% target set by the FRBM (Fiscal Responsibility and Budget Management) law of 2005.
The TDP and BJP accused the government of raising funds beyond the objective of the FRBM Act by circumventing RBI guidelines. The government launched the AP State Development Corporation, through which it raised loans to the tune of ??18,000 crore by entrusting future income to lending agencies.
The public debt was ??1.55 lakh crore at the time of Naidu’s 2019 release. Over the past two years, it has grown to ??2.64 lakh crore.
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Finance Minister Buggana Rajendranadh Reddy, addressing Federal“After all, destitute Andhra Pradesh inherited debts from its fork and Naidu’s financial mismanagement made the situation worse,” he said.
The pandemic has destroyed livelihoods; the government feeds the poorest of the poor, the minister said.