Even as the State government is contemplating implementation of austerity measures to put its finances on track, the situation has turned “alarming”. Apparently, relaxation in the limit under the Fiscal Responsibility and Budget Management (FRBM) Act alone can come to the rescue of the government.
The revenue deficit has shot up to ₹14,134 crore by December from ₹6,641 crore in October 2016 as against the budgetary estimate of ₹4,868 crore. Likewise, the fiscal deficit is touching ₹24,000 crore against the estimated ₹20,497 crore.
In addition, the government has already spent ₹94,415 crore while the budget for 2016-17 has been pegged at ₹1,35,688 crore. The government has by now availed itself of a debt of ₹13,673 crore, though it estimated that it would have to borrow ₹20,097 crore this year. The government borrowed ₹3,500 crore from the market by November 2016 to make both ends meet.
Fresh proposals for an additional expenditure of ₹22,160 crore over and above the budgetary allocations are on the cards. To keep the ball rolling, the government would have to borrow heavily.
“We are seeking a one per cent relaxation in the FRBM limit. The Union Cabinet has to take a decision on this,” said Finance Minister Yanamala Ramakrishnudu. He held a pre-budget meeting with industry and commerce bodies on Tuesday. On its sidelines, he attributed the situation to a sharp drop in revenues and an “extraordinary” hike in both the fiscal and revenue deficits in the 2016-17 budget. “It’s alarming. We are in deep trouble,” he said.
The Minister, however, was quick to add that the increased revenue expenditure exemplified “good development”. “We are spending more on energy, infrastructure, the capital city, water resources and panchayati raj and rural development. This is a good sign of development.”
