Going by the present financial condition of Telangana, it is difficult to say that all is well. Though finance minister Harish Rao is putting up a bold face and saying that the state was well within the limits in managing its finances, there is no doubt we are being pushed further into the debt trap.
Confident Harish Rao brushed aside the impact of Covid-19 pandemic and said the state could register double digit economic growth, even while the country’s economic growth slipped to negative, as it has put in place prudent fiscal policies that are focused more on capital expenditure. “The enthusiastic response received to the bonds issued by the Telangana government is an indication of the prudent financial management system,” he said.
The state has decided to amend the Fiscal Responsibility and Budget Management (FRMB) to increase the borrowing limit as allowed by the centre. Justifying this move the finance minister the legislation allowed additional fiscal deficit of 2 % over and above the prescribed 3 % during the current fiscal and enhance the quantum of guarantees it could provide to State owned corporations from 90 % to 200 %.
Congress Legislative Party Leader Mallu Bhatti Vikramarka said the Telangana Rastra Samiti (TRS) government had already pushed the state into debt trap by borrowing about Rs 3.6 lakh crores during the last six years and the FRBM increase would allow it to borrow Rs 55,000 crores more.
Vikramarka explained that the amended FRBM would allow the state government get the corporation loans and its guarantees to nearly Rs 2.22 lakh crores and by 2023-24 the debt of Telangana was expected to reach about Rs 5.81 lakh crores. He criticised the government for pushing the FRBM Amendment Bill with the help of its numbers, in spite of strong opposition expressed by the Congress in the House.
Taking the revenue earnings at about Rs 1.1 lakh crores per annum into account, keeping aside Rs 50,000 crores for debt servicing and Rs 40,000 crores salaries to government employees the state government would have nothing at its disposal for welfare and development schemes. Any new work would require new borrowings, he felt and added that such a scenario would have no money for implementing flagship schemes such as Rythu Bandhu, Rythu Bima, social security pensions, maintenance of irrigation projects, fee reimbursement and others.
Adamant CM and his team are not willing to accept the conditions imposed by the centre even if it has impact on the state’s borrowings, thus KCR and his TRS government was pushing the state into a debt trap!