Notwithstanding the opposition’s criticism about growing debt burden, Telangana State may well get approval for enhancing its borrowings for this fiscal year 2018-19.
The State is allowed to raise market loans not exceeding 3% of its GSDP under the Fiscal Responsibility and Budget Management Act. However, the 14th Finance Commission laid down certain criteria for a State to seek increase of its FRBM limit to 3.5%. The required three criteria are- the debt to GSDP ratio should not exceed 25%, a State should have revenue surplus and its interest payments should not exceed 10% of its total revenue receipts.
The State’s FRBM was enhanced in the last two consecutive years to 3.5% but last year, a concern was raised by some that the State may not be able to get the FRBM relaxation for 2018-19 as its debts and interest burden was mounting significantly if its revenue did not increase significantly.
The State’s revenues continued to grow at around 20% despite the initial setbacks of demonetisation and adjusting to the Goods and Service Tax. The State can raise ₹23,400 crore at 3% of GSDP and the State represented to the Centre to relax the limit to 3.5% as it fulfilled the required criteria so that it can borrow additional ₹4,000 crore.
Additional leeway
The State is keen to complete its ongoing various infrastructure development projects in the election year and an additional leeway to raise more funds would make its job easier, sources said. Sources said that the request of the State was under process and they were hopeful that their request would be considered favourably based on the primary report of the Comptroller and Auditor General of the last financial year indicating the financial health of the State.
The State had already borrowed ₹10,000 crore so far during the current fiscal. Chief Minister K.Chandrasekhar Rao during his recent visit to Delhi gave a memorandum to the Union Finance Minister and requested for relaxing FRBM limit to 3.5% at the earliest so that the State could speed up its development projects.
Telangana made its mark with the highest annual revenue growth rate in the range of 17% to 21%.
