The center attacks T’gana for “high debt” | Latest India News

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As the war of words between the ruling Telangana Rashtra Samithi (TRS) party and the Bharatiya Janata party escalates, the BJP-led center has accused Gov. K Chandrashekar Rao of financial mismanagement in the state.

At the end of her three-day tour of Telangana on Saturday night, Union Finance Minister Nirmala Sitharaman issued a report on the state of state finances, which expressed concern over the alarming increase debts and poor spending in key sectors such as health, education, rural development and roads.

According to the report, Telangana’s cumulative debt burden amounts to a huge 312,191 crore, according to budget estimates for 2022-23. This, apart from borrowings outside the State budget in the amount of 97,940 crores till March 31, according to the state finance audit report of the Comptroller and Auditor General of India, tabled during the budget session in March this year

“The CAG pointed out that the ratio of outstanding debt to gross domestic product of the state has increased continuously from 2016-17 to 2020-21. Considering off-budget borrowing as of March 31, 2021, the debt-to-GSDP ratio was 38.10%, well above the national average of 31%,” the report said.

Citing the CAG, Sitharaman said as many as 14 public sector companies and six self-governing bodies in Telangana have stepped up 21,802 crores in 2020-21 and 111,898 crores at the end of March 2021 from various banks on behalf of the state government for which principal and interest would be funded from the state budget.

She pointed out that the Center had written a letter to the state government on March 31 this year, stating that these borrowings should be considered borrowings by the state government itself, as they are contrary to the tax transparency and tax-damaging standards. sustainability of states. “The scale of borrowing is huge in Telangana,” she said.

Against the national average of 0.7%, Telangana has an off-budget borrowing of 4.65% of its GSDP, she said.

The report released by the Minister of Finance also pointed out that new sources of risk have emerged in the form of increased spending on unmerited gifts, an expansion of contingent liabilities and increased corporate arrears. electricity distribution (Discoms).

He further said that Telangana topped the table of states that defaulted on the payment of subsidies to power distribution companies with a cumulative outstanding amount of 11,915 crores resulting in a huge loss for discoms, who in turn defaulted on payments to power generation companies for purchasing power.

He also pointed out that during Telangana’s 2022-23 budget, allocations for sectors like education, health, rural development, roads and bridges were very low.

“Only 7.3% of its total expenditure was allocated to education in Telangana’s 2022-23 budget, which is below the national average of 15.2%. Similarly, the allocation was only 5% for the health sector, 3.9% for rural development and 3.2% for roads and bridges,” the report points out.

State Finance Minister T Harish Rao has strongly opposed the Centre’s hegemony over state government borrowing. “Nirmala Sitharaman says the Center has the power to control state borrowings in accordance with the Constitution. But the Center itself has borrowed beyond the authorized limits. Did the Constitution give such extraordinary powers to the Center? He asked.

He recalled that the Centre, too, would take out off-budget borrowing to balance budgeted income and expenditure and overcome the budget deficit. “How can she object to states resorting to similar off-budget borrowing? There cannot be separate standards for the States and the Center,” he argued.

Rao also alleged that the finance minister remained silent on the recommendation of the 15th Finance Committee on amending the Fiscal Responsibility and Fiscal Management Act, to allow states to borrow more loans. “How can the FM ignore such a crucial recommendation and try to impose restrictions on states?” He asked.


  • ABOUT THE AUTHOR

    Srinivasa Rao is Deputy Editor based in Hyderabad covering developments in Andhra Pradesh and Telangana. He has over three decades of reporting experience.
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