Jagan Government finds itself in Catch 22 situation

Thu Jul 29 2021 19:23:53 GMT+0530 (IST)

With August 1 barely a couple of days away, the YSRCP government is a worried lot. How to mop up money to pay the salaries and pensions to present and former employees of the government is the biggest challenge before them. Also, the government has to ensure that all the beneficiaries get their welfare pensions on time.

The Government is now tying itself into knots so as to pay the salaries. According to sources, a month's maintenance of the government offices and payment of salaries and pensions needs at least Rs 10000 crore. The Government coffers are practically empty. So, the State government is running from pillar to post to secure loans. However, the 15th finance commission has fixed Rs 4872 crore as the limit for borrowing for the Andhra Pradesh government and has indicated that it has already crossed the limit.

This means that the government cannot borrow Rs 10000 crore that it needs and that its borrowings cannot cross Rs 4872 crore for this month. This means that the salaries of the government employees and the pension amounts of the retired employees would be delayed for the month of August. If that happens, there would be a huge outcry among the employees and the pensioners. Sources say that the government would give first priority to the welfare pensions. Only after that the salaries would be paid, the sources say.

AP Finance Minister Buggana Rajendra Nath is trying to mobilse resources and has visited New Delhi several times in the past few weeks to seek exemptions from the borrowing limit. However, the Central Government is insisting on financial discipline and is putting its foot down. Every time, Buggana had to return empty handed. The Jagan government is also not interesting in hiking taxes as it would make the state government unpopular. Now Buggana is left with no choice at all. He cannot get loans and he cannot even hike taxes on the common man. Its a Catch 22 situation for Jagan's government.