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The Congress has requested President K R Narayanan to impose financial emergency in Andhra Pradesh in view of the state government's inability to honour pending bills and because of several financial irregularities, as pointed out by the Comptroller and Auditor General of India.
"Otherwise, we apprehend further deterioration of the state's fiscal management in the coming months which may ultimately go beyond any control. It may well-nigh be impossible to retrieve the situation and put it back on the right track", the Andhra Pradesh Congress Committee told the President.
The Congress has also alleged large scale " highly irregular" and "illegal" diversion of funds from autonomous bodies to the treasury to meet the financial crunch.
Two examples of such irregular diversions pointed out by the party are: diversion of Rs 1,000 crore collected by the agricultural marketing committees as cess for welfare of farmers to the treasury and "fraudulent and illegal" transfer of funds raised by the autonomous corporations like irrigation, road development etc. by way of public bonds to the government treasury.
It said the government floated public bonds worth Rs 500 crore one day prior to the presentation of the budget for 2000-2001. Within a month of the first bond issue, the government went in for another public bond for Rs 500 crore.
"This way of floating bonds every month indicates the pathetic financial positioin of the state government", it said.
It said there were also several instances of funds released by the Government of India for specific purposes being diverted into the treasury which "requires thorough probe by a Central investigating agency".
The Pradesh Congress told the President that as much as Rs 2,400 crore due to contractors and others for works already executed remain unpaid. Four or five months ago, the government had imposed a ban on payments and it was hoped the ban would be lifted on April 1 at the commencement of the new fiscal year.
However, now the bills have been remitted back to the department for further scrutiny, thus putting off payment by another six months. "This has never happened in any state in India".
It has charged the Naidu government with "indiscriminate borrowing" money from external financial agencies with the result the debt position today was Rs 28,701 crore as against Rs 10,550 crore in the last year of Congress rule ( 1993-94).
"The state is solely surviving on borrowings. Several parts of the state are now reeling under severe drought conditions but the state government is unable to extend any relief of its own.
Neverthless, the state government has been spending enormous amounts on publicity blitzkrieg at the expense of the state exchequer only to further the personal image of the Chief Minister", the President was told.
The party has also quoted the observations in the CAG report for 1998-99 (Report 3 of 2000) to indicate fiscal irregularities:
While liabilities grew by 21%, the assets grew by only 13% during 1998-99, mainly as a result of as very high (51%) growth in the deficit on the government account; the revenue expenditure (Rs 16,944 crore) during the year exceeded the revenue receipts (Rs 14,260 crore) resulting in a revenue deficit of Rs 2,684 crore.
The net effect of the transactions in the Consolidated Fund, Contingency Fund and Public Account was decrease in the cash balance from Rs 646 crore at the begining of the year to Rs 60 crore at the end of the year;
Revenue expenditure accounted for 92per cent of the total expenditure ( Rs 18,129 crore) of the Staste Government and was mainly on non-plan (79 per cent).