Bangaru Telangana will need hike in user charges

Hyderabad: To improve state revenues, the TS government proposes to increase the base of some taxes and revise some user charges. This forms part of the ‘vision document’ the government submitted to NITI Aayog (the erstwhile Plan-ning Commission) on how it will convert the state to “Bangaru (golden) Telangana.”

The document contains a strategy for seven years, and an action plan for three years. The state borrows nearly 91 per cent of its requirements through market sources. The profiles of the outstanding market loans (at the end of March 2015) indicate that nearly 49 per cent will mature in the next seven years.

If the repayment obligations of market loans during this period are met from bulk borrowings, it will reduce the net debt resource for financing developmental activities.

The TS government stated in the document that the prescribed limits on debt and fiscal deficit ratios may restrict the scope for borrowing. It appears that the government will depend more on non-debt resources — augmentation of its own tax and non-tax revenue.

The trend of receipts and expenditure, as a proportion of the gross state domestic product, shows that it is feasible for the state to aim for augmentation of its own tax and non-tax resou-rces to raise revenues.

The TS government said that as the scope for higher borrowings was very limited, the state government had to pay attention to revenue augmentation to finance the fiscal deficit and to meet the goals of the state.

The limit of debt to GSDP ratio set by the Fourteenth Finance Commission (less than 22.38 per cent by 2019-20) restricts the scope of the borrowings unless the state achieves the expected growth in GSDP.

Higher borrowings would lead to higher interest payments and to higher fiscal deficit-to-GSDP ratios. The TS government told the NITI Aayog that the budgetary allocations were prioritised as the economic sector (47 per cent), social sector (31 per cent) and general sector (22 per cent).

The government said that the Budget estimates for 2016-17 indicated a revenue surplus of Rs 3,718.37 crore and a fiscal deficit of Rs 23,467.29 crore. To achieve Bangaru Telangana, the TS government said that it had taken up initiatives such as accelerating economic growth, improving infrastructure and programmes targeting social welfare.