Amaravati: Controversy over state government obtaining rupee 25,000 crore loan through AP State Development Corporation (APSDC) does not appear to be over as government reportedly entered into negotiations with consortium of bankers to revise the previous MoU.
The development came after Andhra Pradesh’s high court questioned the government for making the governor in a personal capacity a guarantor of the debts.
Sources said the finance department asked bankers to revise the memorandum of understanding by removing references to the governor as guarantor to avoid legal problems.
Although the government initially argued that all government transactions would be handled on behalf of the governor as he is the constitutional head of state, the government backed down after the issue became a controversy involving a constitutional authority. The government has already obtained a loan of 25,000 crore rupees by sequestering the excise income as a counter-guarantee.
The state government’s decision to set up the APSDC exclusively to borrow money from various financial institutions has sparked controversy, with several PILs having been filed in the PA’s high court. The Union Ministry of Finance had also sought clarification from the state government following a report by the Comptroller and Auditor General (CAG) on the formation of the SDC, as it suspected that the new entity had been incorporated to circumvent the rules of the consolidated fund and the treasury.
However, the state government condemned the SDC allegations. Senior lawyer Dushyant Dave, advocating on behalf of state government in HC, said the petitioners were only trying to scuttle the state government by securing loans for development work.
“All income is reflected in the consolidated fund according to the treasury procedure before being authorized for expenditure,” said a senior official in the finance department.

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