Buggana Rajendranath Reddy jaganAndhra Pradesh Finance Minister Buggana Rajendranath Reddy defended not showing a 25,000 Crore loan to the state assembly saying that the state government is only a guarantor for the loan and the Government’s guarantee will come into effect only when the loan is not paid.

Former Chief Secretary, IYR Krishna Rao found fault with this argument of this Government. “As far as I know the government guarantee has been in force ever since the agreement is signed. This is a trivial matter in this whole issue. The main issue is if today’s government has the power to escort and borrow mortgaging future revenue? No is the answer,” he said.

“How much revenue is to be used for that year must be approved by the state assembly in the form of a budget. The present government does not have the power to mortgage future revenue. I can not understand how banks will agree to such an escrow and given 1000s of crores as loans,” he added.

“The central government and RBI should pay immediate attention to this whole issue. Other state chief ministers are also likely to follow the example and indiscriminately borrow loans to maintain their declining personal reputation,” he said.