Hyderabad, April 24: YSRCP has taken strong objection to the financial indiscipline of the collation government and its decision to allow private players to have access to government funds while going for off-budget borrowings.
Speaking to media here on Thursday, former finance minister Buggana Rajendernath said the government’s decision to pledge all future borrowings of State Mineral Development Corporation (APMDC) and allowing private parties to have direct access to the consolidated fund is highly objectionable and undemocratic.
The amount being raised by the issue of bonds would be used for revenue expenditure which increases the burden on common persons, he said adding that the issuance of NCD (non Convertible Debentures) would further burden the state and its servicing would take a heavy toll.
Issuing bonds is normal but giving permission for the private party which is the custodian of the bonds to directly draw from the RBI is unprecedented and objectionable and we demand that such the coalition partners should take a serious view of this anomaly and question the Chandrababu government.
The amount to be raised through bonds is many times more than the revenue of the APMDC and the amount would be going into miscellaneous account and for revenue expenditure and for a government that boasts about wealth creation this is in total contrast, he said.
When YRCP pledged some properties, the coalition partners had raised a hue and cry and spoke in high decibels about off-budget borrowing but now the same coalition seeking such financial impropriety is highly condemnable.
When compares to the YS Jagan Mohan Reddy government, the coalition government loans have gone up and revenue has come down. The loan taken so far by the Chandrababu Naidu government runs into Rs 1.40 lkah crore and where did this money go, there is no account. No welfare scheme has been implemented as promised during elections, all sections of people from farmers, to students, to women to employees and traders are disappointed with the government. During our term the additional VAT collected was used for welfare schemes and we did not misuse Corporation money, he said.
Despite Covid, we have managed finances in a better manner besides fulfilling our agenda of welfare of the poor while the coalition has been trying to benefit the private individuals from the ex-chequer, he said.
The failure to continue welfare schemes and the concept of wealth creation falling flat has exposed the deceit of the coalition government as every section of the society is affected.
Buggana Rajendeanath explained that the TDP-led alliance government’s move to raise Rs. 9,000 crore through the Andhra Pradesh Mineral Development Corporation (APMDC) via Non-Convertible Debentures (NCDs) highlights serious financial mismanagement and a blatant violation of constitutional principles. Despite APMDC’s limited capital expenditure needs—since mining operations are largely outsourced—the government is pushing the PSU into massive debt to finance its own revenue expenditure. This diversion of funds, intended for operational and strategic development, strips APMDC of its free cash flows and undermines its long-term sustainability.
Following this issuance, APMDC’s total debt burden will cross Rs. 10,000 crore, raising its debt-to-EBITDA ratio to over 8.25x—a dangerously high level that signals unsustainable borrowing. This effectively forces APMDC to depend on the State Government for debt servicing, jeopardizing its autonomy and financial health.
What is most alarming is the inclusion of a direct debit clause from the State’s Consolidated Fund. This provision allows private NCD holders to draw funds from the Consolidated Fund in case of default, bypassing the legislative process outlined in Articles 203 and 204 of the Constitution. It also violates Articles 293(1) and 293(3), which regulate state borrowings and mandate central approval for new debt.
To secure the issuance, the TDP government has mortgaged not only APMDC’s future revenues but also the entire portfolio of minor mineral rights across Andhra Pradesh—an unprecedented move that places critical public resources at risk. Ironically, the same leaders who once condemned the mortgaging of a collector’s office are now compromising the State’s natural wealth.
India Ratings, while assigning a rating of AA(CE)/Stable, explicitly noted that the transaction’s strength depends on this unconstitutional RBI direct debit mandate. In essence, this borrowing exercise is an off-budget liability disguised as a PSU operation, marking a clear case of fiscal indiscipline and governance failure.
Gross financial indiscipline by coalition govt.
