In a classic case of financial mismanagement, the Andhra Pradesh government went short of funds and ended up availing an overdraft from the Reserve Bank of India (RBI) as it had paid Rs 2,067 crore to industrialists in one go in March. As a result, it ended up paying Rs 8.01 crore as interest to the RBI for Rs 5,000 crore it availed as overdraft for five days.
Highlighting the mismanagement, finance officials point to the last minute release of Rs 2,067 crore as incentives to industrialists. Though these incentives have been pending for more than a decade, the TDP government released the funds in one lot without considering the consequences. The incentives include reimbursements of value-added tax, stamp duty and power subsidy .
Most industries which received the incentives are allegedly close to the TDP government and also supported the party during the general elections. Textile, spinning mills, sugar factories, jute, tobacco and aqua units are said to have benefited most with the last minute release of funds.About 3,000 units received their dues in March.
“But this huge release had actually inflicted great damage on the finances and forced the government to go for ways and means and then for an overdraft. This had actually damaged our rating before the financial institutions,” sources further said.
After the RBI collected Rs 8.01 crore as interest for five days, the finance department has asked its officials to take precautionary steps to avoid such a situation in the future.
