The Telangana government has ruled out accessing ways and means advances mechanism of the Reserve Bank of India despite a heavy stress on its financial position on account of paying to banks Rs. 4,250 crore towards the loans of farmers and meeting the Rs. 1,600 crore salary and pension bill of its staff payable on October 1, which was actually released in advance on Friday in view of Dasara.
Ways and means advances are loans paid by the RBI to Central and State governments to help them tide over temporary mismatches in the cash flow of their receipts and payments. They are repayable in three months.
Senior finance officials told The Hindu that the Rs. 4,250 crore payout was budgeted after ensuring enough cash reserves though the government had several other financial commitments in the coming months, but the revenue generation in the State was not so comfortable in critical sectors as value added tax and stamps and registration. In fact, the revenue had dipped in stamps and registration and nearly 3,000 VAT dealers shifted their base to Andhra Pradesh in recent months.
In its memorandum to the 14 Finance Commission recently, the government said it was determined to augment the revenues needed for taking the developmental initiatives forward. “However, the efforts of the State will not suffice to meet the huge commitments”.
Telangana was a newly formed State and there were a number of additional expenditure commitments in terms of higher expenditure on establishment and the new schemes to be taken up to fulfil the suppressed aspirations of people. In addition, the State had to incur additional expenditure to buy high cost power to meet the deficit. Thus, there was no scope for any expenditure compression by Telangana.
Among the commitments named by the government were the prestigious three acres of land to Scheduled Caste families. An allocation of Rs. 50,000 crore will be made for five years from 2014-15 for the welfare of SCs who constituted 15.4 per cent of the State’s population. The government was also committed to allocate funds to STs in proportion to their population.
More importantly, the distribution of outstanding loans between the successor States of Telangana and Andhra Pradesh on the basis of location of projects in the ratio of 53:43 imposed disproportionate burden on Telangana. The signification depreciation of the rupee will add to the servicing of external loans by Telangana.
