Centre keeps Telangana loan plea on hold

Hyderabad: The Centre has been giving anxious moments to Telangana government over amending the Fiscal Responsibility Budget Management Act (FRBM) to enable TS to secure more loans from various agencies.

The TS government had pegged the total loans for this year at Rs 17,398 crore in the state Budget. However, the government is eligible for only Rs 10,895 crore loans as per the FRBM Act, since the loans should not exceed 3 per cent of the state’s GSDP.

To exceed the limit, the Centre’s approval is mandatory to amend the FRBM Act. The TS government has to obtain another Rs 6,503 crore to meet the Budget targets on loans.

During 2008-09, the Union government had relaxed the guidelines and enhanced the fiscal deficit limit from 3 per cent to 3.5 per cent and directed the state governments to amend their respective FRBM Acts accordingly.

The next year, the fiscal deficit target was further enhanced and fixed at 4 per cent as a one-time relaxation. Later, it was brought down to 3 per cent again.

The new TS Budget is scheduled to come into force from December 2 and the Legislative Assembly has to approve it by November 28.

The government has to amend the FRBM Act by November 28 in the Assembly to secure more loans, but the Centre is yet to respond on this issue.

The finance department has written several times to the Centre during the last two months, seeking approval to amend the FRBM Act, but there has been no response.

With the deadline to implement the Budget just 10 days away and still no clarity over the issue, Chief Minister  K. Chandrasekhar Rao had personally written to the Centre seeking a fiscal deficit relaxation on the ground that the newly formed state was facing several financial constraints.

Finance minister Etela Rajender said that the government was confident of getting the nod from the Centre since it was a new state.

“The loans and assets between both states are yet to be distributed. Moreover, the bifurcation of several institutions is yet to be completed. We hope that the Centre will consider these factors and give its nod to amend the FRBM Act,” he said.