Is Centre Owes Rs 1 Lakh Crore To Telangana?

Telangana finance minister T. Harish Rao said that Centre owed Rs 1,05,812 crore to the state in the form of pending funds, compensation and grants in the last eight years. If the Centre can pay back the amount, the Telangana government can clear one-third of its Rs 3.29 lakh crore debts, he said. In fact, the state will have no need to go for new debts, he added.

He was speaking in a short discussion on the Centre’s “dual policy” with regard to implementation of the FRBM Act and its impact on the state’s progress in the Assembly. Rao accused the Centre of imposing restrictions unilaterally on the loans being taken by the states under the FRBM Act. He said that the unilateral decisions by the Centre had adversely affected the growth of the state.

The Telangana government has suffered a loss of Rs 15,033 crore the current fiscal (2022-23) as the Centre imposed restrictions on loans for the state under the FRBM Act, Harish Rao informed the Assembly.

He said the Telangana government is eligible to obtain loans of Rs 53,970 crore, which is 3.5% of the GSDP, in the current fiscal 2022-23, as per the FRBM Act.

Loss to Telangana

The union finance ministry recently communicated to TS that the net borrowing ceiling (NBC) for Telangana has been fixed at Rs 42,428 crore. If the restrictions on off-budget borrowings are also taken into account, the total loss for Telangana will be Rs 15,033 crore. This apart, the state lost another Rs 6,104 crore for refusing to implement power reforms, he said.

The power reforms mandated by the Centre include fixing metres for agri connections and the state did not implement it in Telangana because we felt it would be a burden on the farmers and the poor, he said.

The Centre offered to increase the 0.5% FRBM loan limit to only the states that implement power reforms. If this loss is also taken into account, the overall loss to Telangana on account of the Centre’s restrictions will increase to Rs 17,336 crore, the finance minister said.

All these indicate that the Centre wants to make the states financially weak, he alleged.

RBI report

As per the RBI report, Telangana government is at the 23rd position with regard to taking loans. He also refuted the allegations made by Union finance minister Nirmala Sitharaman and other BJP leader on the state. Every citizen in the country is bearing a burden of Rs 1,25,679 lakh due to debts taken by the Centre while every person in Telangana is bearing Rs 94,272 as burden due to debts drawn by the state, he said, reminding that Sitharaman said that every baby born in Telangana was bearing a burden of Rs 1.25 lakh on its head, which is not true.

By implementing GST, Modi promised to increase the tax share of states from 32 to 42 per cent but in reality, the Centre reduced the tax component to the state by imposing more cess, he said.

Contribution to GDP

The Centre is earning around 22.26 per cent of its revenue through cesses and surcharges but the states are losing their revenue and ending up with only 29.6 per cent share in the taxes they are getting from the Centre,” he said.

Telangana comprises only 2.9% of the country’s population but its contribution to the country’s GDP increased from 4 to 4.9% in the last eight years, he claimed.

Modi had waived the loans taken by his friends in the corporate sector but is picturising as though we are distributing the state’s wealth to the poor, he pointed out.

The Centre also ignored the 15th Finance Commission’s recommendations to release Rs 6,268 crore to Telangana under various heads based on its performance, Rao said.

Capital expenditure

At the same time, the finance minister said the state spent the borrowings on capital expenditure and created assets. “The TRS government took up irrigation projects like Kaleshwaram, Mission Bhagiratha, Mission Kakatiya, etc. which in turn are assets for the state,” he said.

In the last eight years, Telangana assumed top position in terms of increase in state-owned tax-revenue, by registering a 11.5 per cent growth. Odisha came second with 9.7 per cent, followed by Haryana with 9.2 per cent growth in tax revenue.