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Updated: July 22, 2025 07:34
A ₹9,000 crore debenture issue by Andhra Pradesh Mineral Development Corporation (APMDC) has created a political and legal storm, with allegations of constitutional impropriety and fiscal irregularity reaching Parliament and the courts.
Key Points from the Scandal
Tirupati MP Dr. M. Gurumoorthy raised it in the Parliament under Rule 377 questioning the validity of the debenture structure
The pact supposedly provides unrestricted access to the state exchequer by a private trustee through RBI's direct debit system, transcending Articles 203, 204, and 293 of the Constitution
Money mobilized is allegedly channeled back to the state government in the form of veiled loans in the name of mining lease compensation
ex-CM Jagan Reddy accused the TDP government of having mortgaged ₹1.91 lakh crore worth of mineral assets against bonds carrying an interest of 9.3%
The second tranche raised ₹5,526 crore by itself, bringing APMDC's debt to ₹14,000 crore
Legal and Political Consequences
The case is pending before the High Court of Andhra Pradesh, with notices being served on the respondents
Opponents of the decision say it diminishes budget transparency and creates a bad example for off-budget borrowing
The YSRCP has described the deal as unconstitutional and has requested central intervention
Rating agencies have warned the state's fragile fiscal picture even as the economy grows
The Bigger Picture
With Andhra Pradesh's debt now crossing ₹10 lakh crore, experts cautioned against mimicking previous errors such as the Amaravati bonds
The issue immediately raises issues of public money guarantees, the limit on state borrowing, and long-term fiscal responsibility
Sources: Deccan Chronicle, India Today, The Hindu, The Wire
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