Reserve Bank of India had released the data regarding the financial health of the states in the country. Both the Telugu States – Telangana and Andhra Pradesh are staring a huge gross fiscal deficit of 30,000 Crore meaning that the states are earning short of their own expenditure forcing to go for loans.
It is understandable that Andhra Pradesh a deficit budget state will have a fiscal deficit, but Telangana’s condition may be due to over spending. AP is shelling out 27 Crore per day towards debt servicing and interests while Telangana is paying 17 Crore a day to pay back its loans and interests.
Going deep in to the data, AP took 68.2 per cent of its total debt from market while Telangana borrowed nearly 70 per cent. These loans usually attract high interest rates above 8 per cent and cause a great damage to the states’ finances.