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The Telangana government took strong objection to the Centre’s order that it cannot go for off-Budget borrowings this fiscal. With the Assembly polls just a year-and-a-half away, the Telangana government is in need of extra funds but the Centre’s rule has annoyed it and both Chief Minister K. Chandrasekhar Rao and his son and minister K.T. Rama Rao have been venting their ire at the BJP-led NDA government for doing no good to the state even when it is a major contributor towards the economy of the country.
The Telangana authorities have been hoping to raise Rs 55,000 crore through market borrowings but the Centre’s rule would hit its financial planning, ahead of the elections. Further, the Centre brought the off-budget borrowings under the Fiscal Responsibility and Budget Management (FRBM) purview which can be considered as a warning to the Telangana government that it is exceeding its borrowing limit.
Recently, the Telangana government wanted to raise Rs 2,000 crs by auctioning its securities but the RBI denied permission for it. The Reserve Bank also denied permission to the Power Finance Corporation Ltd. and Rural Electrification Corporation Ltd. to release balance loan amounts of Rs 23,729 crore.
Telangana’s cumulative public debt is likely to reach a whopping Rs 3.23 lakh crore, which accounts for 25% of the GSDP. In such a situation, the Centre’s move to put a check to the Telangana government might be a move in the right direction but the slew of restrictions on the Telangana government one after the other would certainly raise doubts if the Union government is trying to control the state for political reasons.
The financial crisis in Telangana would remind one of the brighter financial situation in which the state was after bifurcation while the residuary Andhra Pradesh kept complaining of financial deficit.
Economic experts said that KCR had pushed the state into debts during his rule in the last eight years. The financially surplus state had fallen into deficit while neighbouring Andhra Pradesh’s situation had deteriorated further. Now, both the Telugu states are debt-ridden, except that Andhra Pradesh is openly exhibiting its extreme thirst for funds while Telangana is not going for loans left, right and centre, they pointed out.
The public in Telangana is wondering how could the situation get reversed in eight years even when Hyderabad is an integral part of the state. The Andhra supporters pointed out that Hyderabad made all the difference during bifurcation of the state as it would generate more revenue, in terms of commercial tax, being the capital city and also an IT hub.
Meanwhile, the opposition parties alleged that Telangana has been pushed into debts by KCR and his family. The state is debt-ridden but KCR has as much wealth as Nizams, the Congress leader said.
Political observers said that the situation could be a result of the construction of the world’s largest multi-stage life irrigation project Kaleshwaram and new Secretariat complex. Further, corruption has also increased during the TRS rule, they added.
However, the TRS leaders feel that the Centre was intentionally capping its borrowing capacity with an eye on the upcoming elections, only to push the government into financial trouble and take advantage of the situation.
Buoyed by the victory in Dubbak bypolls and its performance in GHMC polls, the BJP is eyeing to clinch power in the southern state and is putting intense efforts to reach its goal. The BJP leaders at national and state-level have been leaving no opportunity to target the TRS.
It has to be seen how the TRS would bring in money to show off development and welfare ahead of the elections.
