Telangana CM Revanth Reddy.
Credit: PTI Photo
Hyderabad: In the last 10 years, total debt of Telangana and the Special Purpose Vehicles (SPV) created by the government has gone up to Rs 6,71,757 crore from Rs 72,658 crore in 2014-15, revealed the white paper on state finances tabled by Deputy Chief Minister and Finance Minister, Mallu Bhatti Vikramarka in the Assembly on Wednesday.
The white paper also said that Telangana state which was a revenue surplus state in 2014 and has one of the fastest growing economies in the country is now staring at a debt crisis.
Consequently, the state has not been able to spend enough money on critical sectors such as education and health where the budgeted amount as the proportion of the total expenditure is amongst the lowest in the country.
The white paper observed that the debt-to-GSDP ratio of the state was one of the lowest in the country in Financial Year (FY) 2015-16 at 15.7 per cent. By FY 2023-24, the same ratio went up to 27.8 per cent, almost doubled in eight years. The debt-to-GSDP ratio has had an overall increasing trend over the years, averaging 21.5 per cent over the FY 2014-22 period. Further, in FY 2020-21 and FY 2021-22, the state failed to contain the debt-to-GSDP ratio within the 25 per cent ceiling recommended under the Fiscal Responsibility and Budget Management (FRBM) Act.
“This gigantic increase in the debt (almost 10 times) has created an enormous fiscal stress on the state’s finances in terms of its ability to service the debt. Further, no tangible fiscal assets in proportion to the money spent were created in the past 10 years,” said the white paper.
The debt servicing burden of monies which are borrowed on the budget and off-budget has increased enormously and is consuming 34 per cent of the state’s revenue receipts. Further, the salaries and pensions of employees consume another 35 per cent of the state revenue receipts. This committed expenditure has meant that very little fiscal space is available for undertaking any welfare measures for the poorer sections of the society and growth enhancement measures for the development of the economy.
BRS govt misled financial institutions
In response, the opposition BRS termed the white paper as a bunch of lies. Former irrigation minister T Harish Rao while initiating the discussion on the white paper, said it is a ploy by the Congress government to escape from the responsibility of implementing six guarantees. Heated arguments took place between Harish Rao and Chief Minister A Revanth Reddy during the discussion on the white paper. Revanth said the BRS government had misled the financial institutions to raise loans.
Revanth added that the then state government had raised loans for Kaleshwaram project and Mission Bagiratha with an undertaking of repayment through the revenue generated from the projects.
He also said that a special corporation floated gave an undertaking to the financial institutions that it would raise Rs 5,199 crore per year by selling water from the Kaleshwaram project. A similar undertaking was given by the Mission Bhagiratha corporation that it would repay the loan from the revenue estimated at Rs 5,706 crore.