The Bharat Rashtra Samithi-led Telangana government’s struggle to mobilise funds to effectively implement its flagship schemes is proving to be worrying for it, with the State set for elections in less than six months.
The government made a budgetary provision of ₹17,700 crore for Dalit Bandhu, where the government provides a one-time capital assistance of ₹10 lakh each to Dalit families to aid their entrepreneurial aspirations. Under Rythu Bandhu, another flagship scheme, the government provides ₹5,000 per acre per farmer each season for the purchase of inputs and other investments. The government allocated more than ₹15,000 crore for Rythu Bandhu in the Budget for this fiscal.
It began crediting these amounts to farmers’ accounts after the commencement of the kharif season. Farmers who own land up to five acres received the funds. But the process has slowed down due to financial constraints.
The government had made a budgetary provision of ₹38,627 crore for salaries/wages, ₹13,024 crore for pensions, and ₹12,958 crore for subsidies (primarily the provision of free electricity all day to the farm sector). The debt servicing component was pegged at ₹22,407 crore. Of this, the State government incurred ₹5,247 crore at the end of the first quarter, according to the provisional figures submitted to the Comptroller and Auditor General of India.
Even as the Finance Department is struggling to find funds to meet the government’s commitments, Chief Minister K. Chandrasekhar Rao recently announced the launch of yet another scheme, Gruha Lakshmi, which is aimed at providing ₹3 lakh each to poor families who own land, for construction of houses. This involves an outgo of ₹7,350 crore — ₹3,900 crore for beneficiaries in urban areas and ₹3,450 crore for beneficiaries in rural areas.
The government’s unease in raising resources stems from the fact that the revenue receipts of the first quarter did not meet expectations. The State’s total revenue receipts at the end of the April-June quarter were ₹35,024.72 crore. This includes borrowings, and other liabilities in the form of capital receipts of ₹15,876.5 crore. The revenue receipts at the end of the first quarter were about 16.1% of the ₹2.16 lakh crore projected in the Budget estimates for the current fiscal.
Restrictions imposed
Also,the Union Finance Ministry has imposed restrictions on the State’s market borrowings citing “over borrowings” during the previous fiscals. The Finance Ministry said that the borrowing limit of Telangana for 2023-24 would be ₹57,813.99 crore, as per the recommendations of the Fifteenth Finance Commission and as per the annual borrowing ceiling for the financial year. “However, as the State government had over-borrowed in the preceding financial years, the gross borrowing ceiling of the State for 2023-24 has been fixed at ₹42,225.17 crore after adjusting over-borrowing of ₹15,588.82 crore of previous years,” said a spokesman of the Finance Ministry.
Of the borrowing ceiling, the State Government had opted for negotiated loans of ₹1,500 crore and borrowings from public account to the tune of ₹4,107.82 crore. This left it with the option of raising ₹36,617.35 crore from the open market. This is over ₹1,500 crore less than the ₹38,234 crore proposed to be mobilised through borrowings and other liabilities in the current year’s budget.
Even as the State government accused the Centre of stifling the States by imposing restrictions on their borrowing limits, Union Finance Minister Nirmala Sitharaman was categorical that the Centre was discharging its constitutional responsibility of supervising borrowings and said that the limits were equally applicable to all the States.
In her reply to a query in the Lok Sabha, Ms. Sitharaman said that Telangana’s outstanding liabilities increased from ₹1.9 lakh crore in FY2019 to ₹3.66 lakh crore in the Budget estimates of the current fiscal. Telangana was next only to Rajasthan in year-wise increase in outstanding liabilities in percentage terms during the last five years.
There are more welfare schemes likely to be announced in Telangana over the next few months. The government would do well in making sure that its finances are in place before announcing them. It can ill-afford to make promises that will put it in a bind for years to come.
