Chandrababu-AP-over-DraftAs dire finances hit the truncated state, Andhra Pradesh Chief Minister Chandrababu Naidu decided to bite the ‘Overdraft’ bullet. The state is struggling to fund the daily expenses with no help from the center. It had already used 1200 Crore available through ways and means facility of RBI.

As per the rules, in dire financial situations, states can avail ‘Ways and Means’ facility and raise upto Rs 700 crore and another Rs 500 crore under the Special Ways and Means option. Usually these two facilities will not attract any interest if they are repaid in 30 days. If the state fails to repay it in the 30 days period, then the amount will be treated as ‘overdraft’ and the government will be given a final time of 14 days to repay the money. If it failed for the second time then, RBI will charge 9.5 per cent interest.

And now Andhra Pradesh is seeking 200 Crore more by going overdraft. The final decision regarding this will be taken on Monday. The state can averted this situation if center pump in some funds through CST compensation or 13th Finance Commission funds or deficit budget amount. AP is so far averting the situation by stopping the bills of various development works. However the bills now can not be stopped as financial year is ending. There are pending bills worth 4000 Crore with the state.