Cash Crunch In Andhra

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Exactly a month after Andhra Pradesh Finance Minister Yanamala Ramakrishnudu said that the financial condition of the state was alarming, instructions have reportedly been issued to stop making payments for certain bills.

According to a report in The New Indian Express, the state’s finance department has issued oral instructions to the treasury to stop making the payments.

Stating that the the treasury usually gets such instructions during the end of the month, the TNIE report adds that the government is severely short of cash since this is the fourth quarter.

Quoting sources, the report adds that the first priority would be to clear salaries and pensions, following which it would clear the other bills.

Last month, while talking about the impact of demonetisation on the state’s revenues and finances, Ramakrishnudu had said that the revenue deficit had increased by 7% and the finance deficit by 4%.

While the state expected the revenue deficit to be Rs 4,800 crore, it increased to a staggering Rs 14,134 crore, the Minister said.

Similarly the finance deficit, which was estimated to be about Rs 20,490 crore, had increased to Rs 24,000 crore in 2016.

Speaking to the media at the Velagapudi secretariat in Vijayawada he said that to overcome the financial crisis, the state would reduce expenditure in the budget, as the expenditure had exceeded the revenue in 2016.

However, he added that despite the cash crisis in the state, the government has planned to implement all its exisiting welfare schemes and make required allocations in the upcoming budget.

In December, following demonetisation, the state’s cash crunch was so dire, that an amount of Rs 2,420 crore was flown into the state via two special planes from the RBI in Delhi.

Post bifurcation, Andhra had faced a financial crisis after a huge gap between the estimated resources and expenditure in the financial year of 2015-16.

The government earlier estimated the total revenue including receipts from the Centre and its own revenue to be around Rs 27,000 crore from January to March 2016. However, the expenditure was Rs 37,000 crore, including Plan (projects) and non-Plan expenditure, which comprised of salaries, pensions and subsidies.

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