Telangana's debt increases 10 times in last 10 years, claims Congress govt in its white paper on State's finances

HYDERABAD: The new Congress Government on Wednesday has said that under the BRS Government's rule, Telangana's debt has increased 10 times from Rs 72,658 crore in 2014-15 to Rs 6,71,757 crore in the current financial year.

The Government released a comprehensive 40-page white paper addressing the intricate financial situation in the State. Deputy Chief Minister Mallu Bhatti Vikramarka tabled the document and proposed a short discussion in the Assembly to delve into the State's economic condition.

According to the white paper, "Telangana started on a firm footing on the fiscal front. There was a revenue surplus during the first five years. The situation of the state started changing quite drastically once the off budget borrowings started being mobilized in the name of mega projects such as Kaaleshwaram, Palamuru Rangareddy, Sitarama, and Mission Bhagiratha. Special Purpose Vehicles (SPVs) were created to mobilize the necessary resources for undertaking these mega capital-intensive projects.

"Large scale mobilisation of the off-budget borrowings and lack of revenues to the SPVs meant that effectively the government guaranteed loans were being serviced by the government itself from the budgetary resources. This meant a rapid increase in the debt servicing by the state. Therefore, the balance of fiscal space available for the welfare and development of the state of Telangana came down year-by-year," it said.

Debt burden and fiscal stress

"Comparing the last 10 years to the preceding 57 years of united Andhra Pradesh, the State's debt has surged nearly tenfold, reaching ₹6,71,757 crore from ₹72,658 crore in 2014-15. This unprecedented increase has created significant fiscal stress, especially in servicing the debt, with 34 per cent of the State's revenue receipts dedicated to this purpose. Salaries and pensions of employees consume another 35 per cent, leaving minimal fiscal space for welfare measures and economic development.

Financial disparities in expenditure

The white paper highlighted a substantial 20 per cent gap between the budgeted and actual expenditure in Telangana, a figure notably higher than other States and even the united Andhra Pradesh.

"This divergence has led to a significant accumulation of committed expenditure, including payments to suppliers, contractors, and employees. Additionally, there is a substantial gap in the funds allocated and the actual money spent on crucial welfare schemes, including Dalit Bandhu and programs for the welfare of Scheduled Tribes, Backward Classes, and minorities," the white paper said.

According to release, in financial year 2021-22, in terms of the FD-to-GSDP ratio, Telangana’s performance in comparison with other general category states was very poor.

"With an FD-to-GSDP ratio of 4.1 per cent, it is one of the worst performing states, with only Punjab (4.5 per cent) and Kerala (4.9 per cent) registering higher FD-to-GSDP ratios than Telangana in that year," it said.

Challenges in education and health sectors

The white paper highlighted that in education and health sectors budgeted amounts remained among the lowest in the country. "Due to the heightened fiscal stress, the State increasingly relies on daily ways and means advances from the RBI, showcasing the urgency of addressing financial challenges," it said.

Congress Government's plan

The white paper noted, "Despite the stark financial scenario, the Telangana Government expresses its commitment to implementing the six guarantees promised to the people. The focus is on responsible, prudent, and transparent measures to overcome fiscal challenges. The release of the white paper is positioned as the initial step in this direction, emphasising a determined effort to enhance State resources and allocate expenditures more effectively, particularly towards uplifting the impoverished."