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Home / India News / Only way to overcome GST crisis is to borrow money: Jaganmohan Reddy

Only way to overcome GST crisis is to borrow money: Jaganmohan Reddy

‘The Centre has also asked the states to go for additional borrowings. As we cannot tax people more, we are working on possible additional revenue generating options,’ Andhra Pradesh chief minister Jaganmohan Reddy told HT.

india Updated: Sep 09, 2020, 12:16 IST
Vinod Sharma
Vinod Sharma
Hindustan Times, New Delhi
Andhra Pradesh Chief Minister YS Jaganmohan Reddy.
Andhra Pradesh Chief Minister YS Jaganmohan Reddy.(ANI)

Andhra Pradesh chief minister Jaganmohan Reddy is upfront in his criticism of the Telugu Desam Party (TDP)’s Chandrababu Naidu but cautious while talking about the Congress or explaining his supportive, issue-based approach to the Bharatiya Janata Party (BJP). In an interview to Vinod Sharma, Reddy spoke about this, Covid-19 pandemic, his vision of three capital cities for Andhra, etc. Edited excerpts:

How prepared are you to contain the spread of Covid-19? The infection has gravely spiked in recent weeks amid reports of the health infrastructure seemingly crumbling under pressure. The decision of your deputy chief minister Amjad Ali and other legislators to seek treatment in private facilities is an expression of no confidence in the state’s health infrastructure.

We are fully prepared to contain the spread. From being a state with not even a single lab to test for the virus, Andhra Pradesh has, since March (when the sample of the first case was sent to Bengaluru), acquired the capacity to test more than 60,000 samples a day. We are pursuing a trace, test, isolate and treat policy. All district health teams supported by line departments are fully involved in cluster containment under the direct supervision and monitoring of district collectors. A look at the spread of infection in Andhra indicates that the cases started spreading after unlocking started.

The recent spike in cases is expected as lakhs of migrant workers have returned to the state. Our health infrastructure is fully prepared to handle any surge with 4,214 ICU [intensive care unit] beds with oxygen, 17,232 non-ICU beds with oxygen, 17,161 general beds and 1,620 ventilators. In terms of human resources also, we are fully geared up. In addition to the existing health care workers in the system, 2,926 general duty medical officers, 15,98 specialists, 1,461 anaesthesiologists and other technicians, 4,487 staff nurses, 11,200 trainee nurses, 4,109 nursing orderlies, 4,394 sanitation workers and 712 data entry operators have been recruited by district collectors. Above that, 9,712 health professionals are being recruited on regular basis at the state level. That includes 2,000 medical officers, 4,600 staff nurses and other paramedics. The health infrastructure with this kind of manpower and a fully committed administration will be handling any surge without any pressure on the system.

You have said the people have to learn to live with the virus. By official counts Covid-19 cases are rising in thousands every day. What is your strategy to contain the pandemic?

It is now an accepted fact that the people have to live with the virus in the manner we are living with other diseases. To contain its spread, we have to follow Covid-appropriate behaviour. We are aggressively tracing and testing (60,000 samples daily) people in containment clusters. We are leveraging on the availability of two lakh volunteers [200,000] under the newly established 13,000 village and ward secretariats. Each volunteer is allotted 50 households approximately with the mandate to closely monitor their health. In the last five months, these volunteers, supported by 43,000 ASHAs [Accredited Social Health Activists] and 23,000 auxiliary nurse midwives (ANMs) have visited 1.4 crore [14 million] households five times during the fever survey and identified persons with Covid-like symptoms and started testing them. Testing is happening in cluster/containment zones. All primary and secondary contacts of positive persons are being tested. Our strategy of aggressive testing has taken a cue from international learning and WHO guidelines. We have put in place a RCCE [Risk Communication and Community Engagement] strategy with the support of UNICEF for training and awareness on Covid-appropriate behaviour to 1.06 crore [10.6 million] households. A month-long mask campaign has also been initiated for 95% mask utilisation in urban and rural areas. With such a robust system in place, we are very confident of controlling and containing Covid-19. The curve will hopefully be flattened very soon.

Going by your government’s statements, the YSR Cheyutha scheme is said to be a game-changer for rural Andhra by benefitting women belonging to the Scheduled Caste, Scheduled Tribe, Backward Classes and minority communities. But there is criticism that it is not reaching the targeted beneficiaries across caste and religion.

The idea is to help women take up self-employment ventures. Nearly 80% of women between 45- 60 are being covered. To make the effort successful, the government is trying for backward and forward linkages to these units with companies like Amul and ITC. The scheme will cover all religions. The scheme is not meant for any particular religion.

Your bid to help the poor through direct benefit transfers (DBT) is laudable. The flip side is the outreach will consolidate your vote bank, not the state’s economy that is in the red.

All states and the central government have been implementing several schemes. A few are through DBT... The reform that we brought is to ensure that the DBT system is foolproof, that there are no leakages and benefits reaches the genuine beneficiary directly, completely, in time and without corruption. New schemes such as Amma Vodi and Rythu Bandhu are investments in social sector. What the state’s responsibility? Maintaining law and order besides focusing on education, health and agriculture. Any investment in these sectors cannot be simple welfare measures. These, in fact, are social capital building investments. If we can provide free education to all depending on their requirement without compromising on quality, that is the best any state can do towards its people. It is a misconception that only private institutions provide quality education. The IITs [Indian Institutes of Technology], IIMs [Indian Institutes of Management], IISC [Indian Institute of Science] and several other top educational institutions are in the public sector. My government’s focus is to bring back primacy to education in government sector and schemes like Amma Vodi [for financial assistance to mothers to educate their children] are a step in that direction. Providing school books, improving the quality of mid-day meals, strengthening staff and physical infrastructure are aimed at providing quality education. Investments in such schemes cannot be looked at as a burden on the exchequer. Same is the case with the health sector. Andhra’s per capita expenditure in the health sector is more than any other state because of schemes like Arogyasri, which has been revamped in terms of coverage and reach. Improving support systems like ambulances and providing some financial relief to the poor after they are discharged from hospitals is something which any government should do. Expenditure on health cannot be considered as a drain on the state’s finances. To provide good quality and free health services is the fundamental responsibility of the state. Most of our welfare schemes revolve around education, health and agriculture. The services we extend to farmers are limited because we will never be able to do as much as they need. That is one sector which had always been neglected. A portion of the money is spent on irrigation and the rest on investment subsidy to the farmer. Direct or indirect investments in the primary sectors ultimately come back to the state’s economy in one form or the other.

My father late YS Rajasekhara Reddy [YSR] studied the ground realities when he came to power in the undivided Andhra in 2004. In 1997, more than 7,000 farmers committed suicide in the state. Instead of going to the root cause of the problem, the then TDP dispensation brushed the issue under the carpet by passing the buck... YSR understood the problem and realised that most of the farmers committed suicide because of debt. They incurred debt for three reasons: children’s education, health issues and for digging bore wells in the absence of surface water. That is what brought about the fee reimbursement scheme, Arogyasri, irrigation projects and free power supply to the agriculture sector. These schemes addressed the problem and yielded the desired results. I am carrying forward these schemes with some improvisation besides expanding the base. While continuing fee reimbursement, we are focusing on schools, where the infrastructure is being revamped and the curriculum redesigned to meet high standards of education. In the irrigation sector, we are extending input subsidy to save the farmer from debt trap. We are doing that while not ignoring infrastructure creation. Irrigation projects like Polavaram are going on. Three sea ports are coming up. Huge investments are being made in the power sector. Some roads and buildings projects are being lined up with the aid of the World Bank.

It is not the large number of welfare schemes which are causing the so-called financial stress. I inherited pending bills of Rs 40,000 crore in the power sector alone from the previous government. No one was aware of it. This is equal to the money my government spent in a year on all welfare schemes. The state had a debt burden of Rs1,17,000 crore when Andhra Pradesh was divided in 2014 and by 2019 it went up to Rs3,00,000 lakh crore. Repayment stress is there. Pending bills were huge. Then to our misfortune, the economy started doing badly and then came the Covid pandemic.

What was the need for separate village secretariats and village volunteer system? Is the administration unable to reach the people properly at the grassroots level?

The village secretariat and village volunteer system is to provide a delivery mechanism at grassroots level, or in panchayat raj parlance [designating] functionaries in the villages to ensure that schemes are delivered without pilferage. After the introduction of the village secretariat system, pilferage has come to a nought in DBT schemes and welfare measures. There were some functionaries earlier in the panchayat raj system, but the people did not know who they were and where they sat? Now, they are in the midst of the beneficiaries.

For want of employment, many governments have been trying to give unemployment doles. Instead of a dole, why not use youths in a purposeful and service-oriented manner—and pay them Rs5,000 as honorarium instead of Rs2,000 dole. That makes them better and more responsible human beings. In Andhra, they are playing a crucial role in the implementation of welfare schemes. They have played a crucial role during natural calamities and against the Covid-19 pandemic. People have positively received the experiment and appreciated the village volunteers for their efforts.

When 60% of the population lives in villages, common sense tells us that 60% of the government employees should be available in villages. In reality, till this government came to power, not even six per cent of the government employees were in villages. Most of them were in urban centres. That is what we have reversed.

The Centre has lagged behind in paying GST compensation to states. If the stalemate lingers, would you be open to borrowing from the market? What will be its impact on Andhra’s exchequer?

It is okay. They are taking time and so far paying a little late. It is not that they have drastically cut down. They have been passing on [the money] with some delays. This is understandable keeping in view the Covid-19 situation and its impact on the country’s economy. The only way to overcome the crisis is borrowing. The Centre has also asked the states to go for additional borrowings. As we cannot tax people more, we are working on possible additional revenue generating options.

In the context of the New Education Policy, how do you move forward with your promise of English medium in schools?

The problem is till Class 5. The policy says post Class 5, there is no compulsion to have mother tongue as the medium of instruction. In other words, we can implement English medium in schools from Class 6 the way we have designed and planned. Up to Class 5, primacy has to be given to the mother tongue. While conforming to the national policy, we can start giving more and more inputs on English up to Class 5 so that the students are equipped to switch over to English medium from Class 6.

We feel the Centre has done an excellent job in bringing equity in the policy. We decided to introduce English medium not because we love English and want to neglect our mother tongue. It is because we wanted to bring in equity. Those who can afford to are sending their kids to English medium schools while the children of the poor are being forced to study in regional languages as they cannot afford English medium schools. Students with private school background are taking away major chunk of the jobs in public and private sectors, leaving behind those who are educated in mother tongues in government schools. The idea of English medium education is to create an equal platform. If private schools across the country introduce mother tongue as the medium of instruction till Class 5 in conformation with the new policy, then there is no issue at all.

After Telangana’s creation, your predecessor Chandrababu Naidu unsuccessfully sought a special category status from the Centre for Andhra. He wanted to build in the state a revenue-earning city comparable to Hyderabad, Bengaluru and Chennai. Not much has been heard of that since you became the CM.

We cannot give up the demand for special category status. An agro-based state like Andhra can take off industrially only if some quality industrial incentives are given. That would be the biggest incentive as revenue deficit is being taken care of anyhow. Both the previous finance commission and present finance commission have addressed the revenue deficit issue. The so-called financial package is not going to help address the fundamental issue of industrial incentives which the hill states are extended. We continue to harp on the status as we cannot afford to give it up.

...on revenue earning city, I call it perverted thinking. Nowhere in the world has it been proved. Major cities grow over decades and centuries. Investing Rs1,00,000 crore to build a mega metro is not viable. Forget about additional revenue, you cannot even repay the debt which you have spent on infrastructure. What is the contribution of major cities of the US to its economy? Take for example a place called Omaha. With 400,000 population, it headquarters 23 of the fortune 500 companies of the world. That is where Warren Buffet stays. Bill Gates operates from Seattle. Revenue gets generated through manufacturing and a proper service sector. Why should industry be located in urban areas? For instance, Visakhapatnam is not our capital. When it was a small town, a steel plant and a few other industries were set up there a few decades ago. Now, it is emerging as a major city.

In a similar way, we can have growth centres where industries can be promoted. The Covid experience tells us that most of the cities ultimately become sick. There is a gradual shift from the so-called major cities or metros to medium and small towns. Look at the top 10 developed countries. None of them have a metro and mega city. Norway, Sweden, Denmark, Switzerland and Finland…all these developed countries have no mega cities. Development is not industrialisation or urbanisation. Development means many a things like per capita income and happiness index.

Instead of pouring in entire money in building a congested and a not required urban place, spend that money in connecting various places and ensuring faster mobility and cost-effectiveness. It is a wrong perception that cities generate more money. Barring a couple of exceptions, green field capital cities did not succeed anywhere in the world. The success of one such city was built on oil money, which was abundantly available in that nation. Infrastructure was created as financial resources were available in plenty. They did not look at it from the economic angle. Do we have that many resources to build the so-called Amaravathi? The Boston Consulting Group analysed it from economic perspective and said its investments are not viable

That brings one to your plans to have separate capitals for the three arms of the state: the executive, the judiciary and the legislature. The matter is sub-judice. But you certainly can share the administrative vision behind the move.

The three capitals is a layman perception. [In effect] a capital city’s functions are being distributed: executive functions from Visakhapatnam, legislative from Amaravathi and judicial from Kurnool. These are the exact words used by Sivaramakrishnan Committee. The capital’s functions can be distributed among different places. Why all these functions should be delivered from a particular place? The residuary state of Andhra Pradesh suffered twice in the past on account of Chennai and Hyderabad. That is what history tells us. If you put all your eggs in one basket you are going to suffer. Then why you want to continue with the same approach without taking into account the past experiences? It is not logical and rationale thinking. The insider trading approach in Madhapur of Hyderabad in late 90s is tried again by the previous regime in Amaravathi. If the secretariat and assembly or High Court do not mean development, then why bother… do not talk about them. The document prepared by the previous regime says that you need Rs 1,00,000 crore. Instead of planning to build a so-called city at a place which is not suitable for construction of any mega structures in 33,000 acres land acquired or pooled from farmers, he could have planned something in 500 acres elsewhere.

Why does he need 33,000 acres when a mere 500 acre land is sufficient as per the Siva Rama Krishnan report? The special investigating team is probing land deals unearthing benamis of my predecessor and his cronies. People with vested interests purchased lands from poor farmers. Then came the announcement of the capital and subsequent scam. Those who purchased lands at throwaway prices benefited to the tune of thousands of crores of rupees. It was just a real estate business by the previous regime to benefit a certain section of people. Once the development is diversified and spread across the state, they become centres of growth in near future.

How many major cities Kerala has? None! And yet, Kerala is ahead of other states in several parameters. Development has to be distributed across the state. Visakhapatnam, Anantapuram, Kurnool and Tirupati and a few other cities can become clusters of development. Ports are being developed. Central Andhra, which is an agriculture hub, can have some agro-logistic parks and all can prosper.

What will you say to the criticism that you want to downgrade Amaravathi to slight Naidu? The charge sticks also because the TDP leader has not been too kind to your administration whom he accuses of spying on the Opposition.

This is absurd. Why should we bother about Amaravathi? We believe in the overall development of the state. We did not leave Amaravathi. The legislature will continue to work from Amaravathi. When experts say it is a wrong approach, why do not you respect their opinion?

In India, the concept of referendum is not in use. The other option available for taking a decision is the experts’ opinion. Had there been a referendum option available, we would have definitely gone for it. We are confident the people would have given a thumps up for our decentralised development. Except those 29 villages and 10,000 farmers opposing decentralisation for obvious reasons, the entire state would have stood behind us if a referendum were to be conducted. Since, there is no scope for this, we respected the committee appointed by the central government [and] we appointed our own expert committee. They too have given their opinion. We took the opinion of BCG. Based on the feedback from such quarters, the state’s political executive took a conscious decision that a decentralised model is far better than a centralised model.

Mega cities are unwanted, they only drain resources and become a burden on the people. The government’s role is to provide services at optimum cost. We are for decentralised development. We are going for multi-speciality hospitals and medical colleges in all districts (new districts are going to be carved from the existing 13 districts).

The spying allegation is absurd. The DGP [director general of police] asked the opposition to produce evidence which they could not. In fact, when we were in the opposition, phones of our senior leaders were tapped and we had provided official proofs to that effect.

Your father was also a political opponent of Naidu. But he would often say that they started in politics at the same time, in the same party and were friends. Is not there a need for rival parties and leaders to work together when the pandemic is posing serious challenges to public health and the economy?

They are stuck up with the single idea that they should protect their investments in Amaravathi. They have no other agenda. In the last 15 months, he is only talking about Amaravathi and nothing else. Amaravathi is not worth discussing. We have said time and again that we are for decentralised development. There is no way we can consider one single place for development just because you and your colleagues purchased land there. What cooperation you are referring to? After March, he [Naidu] has not set foot in Andhra while the state is battling the pandemic.

How are you viewing the recent demands for an overhaul of the Congress, your erstwhile party? Can it stay intact without a Gandhi family member at the helm?

Ours is a regional party and is very strong in Andhra. We do not have the numbers to influence national politics despite being the fourth-largest party in the Lok Sabha. Our role is confined to the development of the state which was pushed into a disadvantageous position after the bifurcation. We are in the process of rebuilding the state. National aspirations are not of a priority to us.

How would you describe your equation with the BJP whom your party has often supported in the Parliament? Are you a proximate ally or an issue-based supporter?

We place the interests of our state ahead of other [matters] and navigate in that direction in dealing with every issue. We believe that the special category status for Andhra will be a reality, if not now then in the near future. We are optimistic on that count. Our support will be issue-based and will dovetail the betterment of our state in every aspect. We are in the process of rebuilding the state after its reorganisation.

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