SBI rejects Jagan Govt’s Rs 6,500 Cr overdraft plan
The government of Andhra Pradesh led by YS Jagan relies heavily on loans, overdrafts and debt to fund cash distribution programs. The government is looking for new loans even to credit the salaries of government employees and also to carry out the pension distribution program.
Now the AP government has approached the State Bank of India to allocate an overdraft of Rs 6,500 crore for the implementation of center sponsored programs (CSS) in the state.
With state finances at their lowest, the government requested an overdraft to be used as working capital by five nodal implementing agencies. In this regard, Andhra Pradesh Finance Secretary KVV Satyanarayana wrote to the SBI asking for Rs 6,500 crore overdraft.
This clearly showed that the financial stability of the state government is practically non-existent. The SBI was amused by the government’s request and was quick to reject any progress in this regard.
The SBI rejected the overdraft proposal, calling it “unusual and unheard of”.
“Applying for a loan is something we see a lot. But looking for an overdraft by sequestering central funds is unheard of, ”said one bureaucrat.
The state government’s decision to sequester central funds is sure to anger the central government. We can expect the Center to warn the state government of the same very soon, another financial expert said.