Telangana Finance Minister Etala Rajender has made another strong pitch for increasing its borrowing limit from 3 per cent to 3.5 per cent of Gross State Domestic Product under the Fiscal Responsibility and Budget Management (FRBM) Act by the Centre, as recommended by the Fourteenth Finance Commission (FFC).
At a pre-budget meeting of States’ Finance Ministers convened by the Union Finance Ministry in New Delhi on Saturday, Mr. Rajender also registered several concerns of the State on Central Sales Tax (CST) compensation, funding pattern for Centrally Assisted State Programmes and informing States on their net borrowing limits under FRBM well in advance of their budget sessions.
He reiterated at the meeting chaired by the Union Finance Minister, Arun Jaitley, that the Telangana State had fulfilled three conditions, as suggested by the FFC, to be eligible for 0.5 per cent increase in the borrowing limit. He explained that Telangana had not allowed its debt to exceed 25 per cent of GSDP, kept interest payment below 10 per cent of revenue receipts and achieved revenue surplus in the current and immediate preceding year.
Deprived of borrowings
Requesting the Centre to fix the borrowing limit of Telangana to 3.5 per cent of its GSDP for 2015-16 and 2016-17, Mr. Rajender alleged that Telangana was deprived of borrowings of over Rs. 900 crore in 2014-15 due to distribution of the limit between Telangana and residuary Andhra Pradesh in the ratio of population following bifurcation. He urged Mr. Jaitley to plug the loss by re-fixing the borrowing limit for 2014-15 even now.
Further, the Telangana Finance Minister sought the Centre’s intervention in resolving the tax-related issues of HMDA and HMWSSB stating they were not-for-profit organisations carrying out development activities. Imposing tax on their income would amount to taxing the State government resources that are used solely for provision of public goods. He also reiterated the demand for extension of incentives for industrial promotion and a special package for the development of backward regions, since Telangana was a newly-born State. He mentioned that AP was given Rs. 700 crore on that count but Telangana was deprived of the appropriate benefit. Pointing out that abrupt termination of schemes such as model schools, BRGF, National Mission for Food Processing, Assistance for Left Wing Extremist affected areas and others had left States with recurring liabilities and suggested that the Centre give at least three years notice to the State ahead of its intention of stopping Centrally Sponsored Schemes (CSS).
