The new Congress government in Telangana is set to face an uphill task in fulfilling the six guarantees that the party made to the farmers, women, and youth of the State during its election campaign.
For instance, the Mahalakshmi scheme guarantees women ₹2,500 every month, gas cylinders for ₹500 (nearly half the current price), and free travel in public buses. Also, on the lines of the Kalyana Lakshmi scheme of the previous Bharat Rashtra Samithi (BRS) government, the Mahalakshmi scheme promises ₹1 lakh each and 10 gms of gold to women from economically weaker sections for marriage.
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A major guarantee is Rythu Bharosa, a farmers’ investment support scheme, under which the Congress has promised ₹15,000 per acre to 58.33 lakh farmers. The BRS government had implemented the Rythu Bandhu scheme providing ₹5,000 per acre and had made a budgetary provision of a little over ₹15,000 crore for the current fiscal. Increasing the investment support by 50% would mean that the Congress government would have to spend an additional ₹7,000 crore every year towards the scheme in addition to the ₹12,000 an acre it has promised to the 30 lakh tenant farmers. The outgoing government did not consider tenant farmers while implementing Rythu Bandhu.
The difficulty in mobilising finances for the implementation of these and other schemes stems from the fact that the revenue receipts of the government are not up to expectations with only around 50% of the State’s projected own tax revenue achieved at the end of seven months of the fiscal year. The borrowings/loans raised by the BRS government over the past nine and a half years had imposed an interest burden of ₹22,407 crore on the government in the current fiscal. Of this, ₹12,956 crore was paid till the end of October. This is in addition to the loans raised through corporations including Kaleshwaram Irrigation Project Corporation Limited.
The government’s total revenue receipts at the end of October amounted to ₹99,775 crore, 46.07% of the ₹2.16 lakh crore projected in the budget estimates for the current year. The State’s own tax revenue during the period was a little higher at ₹77,382 crore, which is 50.74% of the budget estimate of ₹1.52 lakh crore, according to the provisional data released by the Comptroller and Auditor General of India (CAG). The state of finances can be gleaned from the fact that Telangana depended on instruments of financial accommodation such as the special drawing facility, ways and means advances, and overdrafts for most part of the current fiscal.
In September, for instance, the government availed itself of ₹863 crore under the special drawing facility for all the 30 days of the month and it resorted to ways and means advances amounting to ₹1,443 crore for 26 days in addition to the ₹666 crore that it raised through overdraft for 10 days.
In the budget estimates, the State had proposed to raise ₹38,234 crore through borrowings, primarily market borrowings, for the year, but the Union Finance Ministry had curtailed the borrowing limit to a little over ₹36,617 crore citing over borrowings during the previous fiscal. The Union Ministry said the limit had been fixed in line with the recommendations of the 15th Finance Commission and as per the guidelines for annual borrowing ceiling. The borrowings limit has been fixed at ₹57,813 crore for the current year but it had to be cut down to ₹42,225 crore as the State had over borrowed during the preceding financial years.
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This was the case during the previous fiscal, too, when the State could raise open market borrowings to the tune of ₹32,119 crore as against the projected ₹52,167 crore, according to CAG figures. The State had ended up paying interest of ₹20,952 crore as against the ₹18,911 crore projected in the budget for 2022-23, the CAG report said.
The State had to depend on sale of lands and also advance auction of liquor outlets ahead of the announcement of the schedule for the Assembly elections, which provided it some cushion for a while.
Given this background, it will be a herculean task for the new government to manage its finances. It can ill-afford to raise taxes and duties in the immediate future and the prospect of securing permissions for additional borrowings to meet its commitments also appear to be remote.
