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AP urges Centre to waive states' loans

Syed Amin Jafri in Visakhapatnam

The Telugu Desam Party, a key supporter of the National Democratic Alliance government, has demanded waiver of all the loans borrowed by states from the Central government.

The demand assumes significance since Andhra Pradesh government's borrowings from the central government stood at Rs 198.29 billion out of the state's total outstanding public debt of Rs 324.26 billion, at the end of March 31 this year. The state's borrowings from the Centre are budgeted to go up to Rs 246.71 billion out of total public debt of Rs 408.57 billion at the end of the current financial year 2001-02.

In the backdrop of this huge debt burden and the precarious financial position of the state, which faces a revenue deficit of Rs 38.87 billion and fiscal deficit of Rs 88.97 billion this year, the Telugu Desam has adopted a resolution seeking waiver of all central loans, on the third and concluding day of the on-going Mahanadu (biennial convention) of the party.

"The loans borrowed by the states from the Centre should be waived as they constitute a major chunk of the total debts of the state government," the resolution on the Centre-State relations demanded.

The resolution also hinted that if the central government conceded the demand for loan waiver, this would significantly reduce the debt burden of the state.
The party leaders, who spoke on the issue, suggested that the Telugu Desam should use its clout with the NDA government to extract maximum fiscal concessions.

The TDP also claimed that grave injustice was done to Andhra Pradesh by the Eleventh Finance Commission report and also Lakdawala Committee recommendations on the determination of poverty ratios.

"It is unscientific to cut down the revenue flows to the reforming, performing and progressive states based on the recommendations of these bodies," the resolution said

The Telugu Desam, which is a powerful votary of more fiscal autonomy and borrowing powers to states, also demanded that the states should be allowed to tap resources from the external agencies like World Bank directly without the 'medium' of the central government, even though such a demand has been rejected by the Union Finance Minister Yashwant Sinha recently.

Terming effective decentralisation of powers to the states as 'an essential requisite for a country as diverse as India', the Telugu Desam underscored the urgent need for granting more fiscal autonomy to the states since they were responsible for implementation of second-generation reforms.

"While the first generation economic reforms were largely implemented by the Centre, the responsibility of carrying forward second generation reforms lies with the states," the resolution said, urging the central government to increase its funding to the state.

The party also sought a hike in the states' share in the central revenues to 51 per cent and abolition of the centrally sponsored schemes.

Emphasing the need for rationalising the distribution of resources between the Central government and the states, the resolution said that the responsibility for implementing the schemes should be entirely entrusted to the states and there should be no central intervention.

The party's other demands included providing flexibility to the state government in implementing developmental schemes, conferring greater autonomy to the state for market borrowings and immediate implementation of Sarkaria Commission report in toto.

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