Bhatti Vikramarka begins the white paper by stating that in 2014, Telangana had started on a firm footing on the fiscal front.
Updated On – 12:31 PM, Wed – 20 December 23
Hyderabad: The white paper on the State’s finances, presented by Deputy Chief Minister and Finance Minister Bhatti Vikramarka Mallu in the Assembly on Wednesday, states that Telangana, which was a revenue surplus State in 2014 and has one of the fastest growing economies in the country, is now staring at a debt crisis.
The paper says that from a situation where the State had positive balances for all the 100% of days in 2014, the situation now was that the State had positive balances in less than 10% of the days.
This shows enormous fiscal stress, it says, adding that the State has not been able to spend enough money on critical sectors such as education and health where the budgeted amount as the proportion of the total expenditure was amongst the lowest in the country.
Bhatti Vikramarka begins the white paper by stating that in 2014, Telangana had started on a firm footing on the fiscal front.
“There was a revenue surplus during the first 5 years. The fiscal responsibility norms were also broadly adhered to. The situation of the State started changing quite drastically once the off-budget borrowings started being mobilized in the name of mega projects such as Kaleshwaram, Palamuru Rangareddy, Sitarama and Mission Bhagiratha. Special Purpose Vehicles (SPVs) were created to mobilize the necessary resources for undertaking these mega capital-intensive projects,” he says, going on to say that the Fiscal Responsibility and Budget Management Act was amended in the year 2020 so that the quantum of guarantees that could be given by the State government was enhanced consequently from 90% of revenue receipts to 200%.
“Large scale mobilization of the off-budget borrowings and lack of revenues to the SPVs meant that effectively the government guaranteed loans were being serviced by the government itself from the budgetary resources. This meant a rapid increase in the debt servicing by the State. Therefore, the balance of fiscal space available for the welfare and development of the State of Telangana came down year by year,” he states.
“After 10 years of the previous government rule, a situation has come that the debt burden including the off-budget borrowings of the State has become enormous. This has created distress on the fiscal front. The present white paper is an attempt to give a clear picture as to where the State finances stand as of December 2023,” he adds.
The Finance Minister also adds that efforts would be made to increase the State’s resources and direct expenditures toward uplifting the impoverished, while reducing unnecessary spending.
“The new Government is determined to implement all the six guarantees which are promised by the party based on which the people of Telangana had given the mandate for change. The Government is determined to overcome the fiscal challenges in a responsible, prudent and transparent manner. The white paper on State finances is the first step in this direction,” he concludes.
