Fiscal indiscipline and AP government

A mismatch between the government's revenues and spending, now and in the foreseeable future, requires heavy borrowing, leading to a large and increasing debt. That increasing debt raises a serious challenge to all of the goals that various people expect their government to pursue. It also raises questions about the nation/State's future wealth and whether too much debt could lead to higher interest rates and even to loss of confidence in the government's long-term ability and commitment to honor its obligations.

Many analysts have concluded that the trajectory of the AP budget set by current policies cannot be sustained. Economists have warned against it and government agencies have expressed concern over the debt-trap. Yet, having raised public expectations, the Governments often tend to ignore those warnings. Cash transfers make people happy, no doubt. Many among those who advocate for cash transfers are frustrated with corrupt and inefficient governments and want to explore an easier way out. There is no easy way out.

The deprived, marginal and poorer sections of the societies need better governance modules. One could always keep supplying cash to the hungry stomachs. But a safe and secure environment or governance does not mean developing dependence of people on the government. It should lead to empowering them in every sense and provide them livelihoods that allow them to sustain themselves. Governments should keep lending a helping hand to them. However, instead, injecting unprecedented amounts of cash into weak state environments, may have unintended and adverse consequences.

Issues like DBTs are complex policy decisions involving difficult trade-offs that require experts dedicated to marshaling technical evidence and evaluating it in dispassionate ways. Have a look at the Governments in place now in the country. Are these leaders selected through political processes and institutions and who deliberate over policy options, weighing advice from different bureaucrats any experts? Political institutions only determine what policies have sufficient support to be pursued so that that particular party in power benefits in future. "Keeping a word" is just an alibi for the governments because they do so only when they think it is convenient and when it is not they don't mind dumping their promises. This is where the political institutions are failing in these roles across the world, in both rich and poor countries. Should AP be any different? The Opposition has been warning the State Government of the pitfalls and dangers of its welfare measures. Yet, there is no caution.

Andhra Pradesh is facing criticism for performing outside the purview of the accounting practices already. Yet, the Budget presented in the Assembly for the year 2022-23 shows not much of a discipline in any sense. In addition the Finance Minister, Buggana Rajendranath, has claimed that the government has dedicated itself to the direct benefit transfers and welfare measures as never before. He proudly announced higher allocations for the same in this year's Budget. Instead of rectifying its flaws, the government prefers to blame the previous TDP government for all the ills. It refuses to accept that its own DBT schemes are draining out what little revenues it gets.