Faced with grim financial situation, the Andhra Pradesh Finance Department has put in a tight leash on use of funds limiting them to absolute necessities, while imposing curbs on expenditure.
The State Finance Department has issued oral instructions directing various departments not to draw funds from the treasury till the State manages to meet the fund requirement to pay salaries to State Government employees for January 2015.
It is estimated that the State would require about Rs 2500 crore to meet the wage payments of the Government employees later this week.
As a part of the contingency plan, it has been forced to resort to Ways and Means borrowings and also raise funds, about Rs 1000 crore, by way of offer of bonds.
According to a Senior Finance Department Official, the gap between flow of funds and requirement is widening. The State, which was carved out as a residual State with 13 districts, had to contend with about Rs 15,600 crore deficit. This has gone up close to Rs 20,000 crore, subjecting the finances to severe pressure.
On Tuesday, Andhra Pradesh Chief Minister N Chandrababu Naidu, during a media conference, said all the expenditure towards development has been put on hold due to grim financial situation. He also said the State had taken up with the Centre, the need to augment funds to meet the requirements and that the Finance Minister Arun Jaitley had agreed to consider this favourably.
Apart from the Centre’s support, the State is also banking on the new Finance Commission to grant funds liberally as it has been put to a disadvantage due to division of the State. This would be beneficial in the medium to long term.
Towards course correction, the State is considering coming up with Vote-on-Account budget for next financial year (2015-16) as it would put tight leash on spending. Under the vote-on-account budget approach, funds are disbursed based on progress of projects and requirements. Such an approach is stated to bring in discipline in spending.