Telangana and Andhra Pradesh seek exemption from fiscal target

Hyderabad: To overcome the financial crisis emerging out of the bifurcation of Andhra Pradesh, the state government has urged the Centre to grant a two-year exemption from implementing the Fiscal Responsibility and Budget Management Act, 2003 (FRBMA) in both Telangana and Andhra Pradesh.

A team of senior officers from the Finance department are also leaving for Delhi to seek Rs 13,000 crore grants from the Centre to overcome the revenue deficit in the residuary state of Andhra Pradesh.

The officials will also urge the Centre to waive off the Rs1,000 crore loan and other payments to be made by the state to the Centre as these loans and other charges towards sending CRPF and CISF battalions to the state were accrued by a united AP, and post bifurcation neither of the states will be fiscally fit to pay them back.

“Earlier too, the central government has given such waivers to states like Bihar and Punjab. The need of the hour is to extend the waiver to Andhra Pradesh and Telangana,” a senior official said.
Officials said exemption for a couple of years from FRBMA was also crucial. FRBMA is aimed at eliminating revenue deficit, build up revenue surplus and contain fiscal deficit and debts.

Officials of the finance department have brought to the notice of the Centre that both the states will be under heavy financial constraints; the residuary state of Andhra Pradesh especially will start with a huge deficit budget and neither of the states will be in a position to meet the fiscal targets laid out under FRBMA.

They pointed out that the states will be forced to secure huge loans from various agencies to meet the budgetary deficit after June 2. State finance department officials have already held a series of meetings with Union finance ministry officials over the issue.

The Union finance ministry is expected to refer the issue to Prime Minister Narendra Modi and Union finance minister Arun Jaitley and take a final decision before June 2.
Governor E.S.L. Narasimhan has recently approved the expenditure fund of Andhra Pradesh and Telangana with a budget of Rs 34,595 crore and Rs 26,516 crore respectively for a period of four months from June 2.

The division of budget was based on the vote-on-account budget approved by the Assembly of the united state in March this year. The new governments will have to table full-scale budgets for the remaining period from October to March after assuming charge.