Telangana State, for the first time since its formation, found its dream run of impressive growth rate coming to a halt.
At the end of three quarters of 2019-20, the State which had been growing in the range of 17 to 21 per cent for the last five years registered a growth rate of mere 2.76% so far over that of corresponding period last year. The ‘rich’ State for the first time became eligible for GST compensation like many other States that clocked below 14% growth rate.
While the Chief Minister K Chandrasekhar Rao put the blame for the steep fall in growth rate on falling GST revenues due to economic slowdown, others in the government analysed that the genesis for the downturn began with demonetisation in 2017 whose tremors were being felt even now on the national as well as State economy.
The reason for the revenue shortfall are by and large due to economic situation across the country, decisions of the Centre rather than local factors, point out sources.
Of the proposed expenditure for the 2019-20 at ₹1.46 lakh crore — ₹10,000 crore was expected to be raised from auction of land — the actual budget outlay is ₹1.36 lakh crore. State realised ₹85,000 crore till November-end, from all sources including loans earning ₹10,500 crore a month. In the last quarter, the State expects to mobilise ₹11,000 crore to ₹11,500 crore a month to touch ₹45,000 crore. The State hopes to bring down the revenue shortfall from ₹15,000 crore to ₹4,000 crore or Rs.5,000 crore despite the fall in revenue growth rate.
Liquor prices
An attempt was made recently to mop up ₹ 4,000 crore additional revenues by increasing prices of liquor across brands. But the move also brought criticism that the State was looking at excise revenue as one of the major sources of revenue when the impact of liquor consumption on public health and crime rate in society were linked.
With no other additional sources of revenue, State hopes real estate transactions in Hyderabad continue to do well though Visakhapatnam is emerging as competition for investors.
The 15 Finance Commission did caution the State on its mounting debt burden of over ₹ 2 lakh crore in the beginning of the year itself when it visited the State in February to seek its views and suggestions before finalising its report.
“What if the growth rate of State falls for some reason and how it would finance its ambitious flagship programmes,welfare schemes and service the debt”? This question was raised by the Chairman N.K.Singh then. The circumstances in the State now vindicate that caution.
However, government sources exude confidence that the investments on irrigation projects and other capital expenditure would lead to significant progress in agriculture and service sectors in the coming months. The automobile sector started showing slight improvement in sales and vehicle tax revenue registered 4% growth from negative growth after October and November festival season.
