The bankers who lent money to the Andhra Pradesh government are now trembling. The government borrowed from the bankers by setting up the Andhra Pradesh State Development Corporation and shifting the liquor tax to it as revenue. The "SBI Cap" company took the commission as a mediator in the whole affair. The government has hired an "SBI cap" to lend. That company did that work. Bankers, however, have not made any inquiries as to whether all the mortgages they are mortgaging are constitutional and the guarantees are valid. The result is a situation that is now in trouble.
The Center says the formation of the Andhra Pradesh State Development Corporation is unconstitutional. It also says it is unconstitutional to transfer tax revenue directly to the corporation. The AP government has to give an explanation on this. Authorities are currently working on this. Saying how unconstitutional it is .. an explanation has to be sent to the Center. But Finance Ministry sources predict that it will be difficult to justify trying in any number of ways. This is because the constitutional provisions are clear. If it is not justified and the Center is not satisfied with that justification, the APSDC will have to be repealed or the rules will have to be changed. If the same happens .. the agreements made with the banks earlier will be invalid.
Bankers will be the first to lose out if any changes are made to the APSDC. The additional excise tax levied on alcohol goes directly to APSDC from there as a repayment to the banks. Now that amount has to be transferred to the Consolidated Fund. If so, the government would be violating a key fundamental clause in the agreement. Then collecting money for banks becomes a burden beyond the head. A situation where nothing can be done even if the government stops paying. A situation where the government is in serious financial trouble but by default cannot go to court. If the court questions how the loans were given against the rules .. Banks are in trouble.
Currently the AP government is maneuvering to borrow all the banks. A few days ago, TDP MLA Velagapudi Ramakrishnababu filed a petition in the High Court on the APSDC affairs, then the public prosecutor asked the High Court not to issue even at least notices at the trial if the banks do not do so. Even though it is known that it is such a sensitive issue .. the government .. the banks .. it is now surprising everyone to be running affairs in violation of the rules. Before long this debt .. Many officials are saying that the honey is on the beak.