Modi Government has delivered a big shock to Andhra Pradesh Government. The Government has brought in a new rule under which the funds released for Central Schemes can no longer be transferred to other accounts giving any scope for funds diversion.
The Government also brought in a new rule to ensure the state government also give its share of funds right at the start. It can no longer spend Central money first and release its share last. Thirty states have approved this new policy except for Andhra Pradesh.
This is a massive shock for Andhra Pradesh as the Government has the habit of diverting central funds to welfare schemes. It can no longer do that now. Also, it has deposited its share right at the start or loses the schemes as a whole.
While the state not spending on capital expenditure (infrastructure), if Central Schemes also does not happen, it will be a huge disaster. This policy is a big shock to the already Cash-strapped Government. But with a majority of States accepting, there is nothing Jagan Government can do now.