BRS Led Telangana Down Path to Fiscal Doom, Shows White Paper

Hyderabad: Telangana state’s total outstanding debt increased tenfold since 2014, from Rs 72,658 crore when the state was formed to Rs 6.71 lakh crore during the BRS government’s regime till November 2023, according to the White Paper on finance tabled by the Congress government in the Legislative Assembly on Wednesday.

The debt in 2014 was Budget borrowing for the 2014-15 fiscal, which shot up to Rs 6,71,757 crore in 2023-24, with Budget borrowing (as per FRBM limits) accounting for Rs 3,89,673 crore. Among others, government-guaranteed loans raised by SPVs (special purpose vehicles), but serviced by the government, accounted for Rs 1,27,208 crore, government-guaranteed loans raised and serviced by SPVs accounted for Rs 95,462 crore and non-guaranteed loans raised and serviced by SPVs, corporations or institutions accounted for Rs 59,414 crore.

The debt service burden shot up to Rs 32,939 crore in 2023-24 from Rs 6,954 crore in 2014-15, with an annual growth rate of 22 per cent, the White Paper stated. “Despite making such a huge debt, no tangible fiscal assets in proportion to the money spent were created in the past 10 years by the BRS regime,” it read.

Tabling the White Paper in the House, Deputy Chief Minister Mallu Bhatti Vikramarka, who holds the finance portfolio, said, “From a situation of positive balances for all 100 per cent of the days in a year in 2014 to a situation where the state has a positive balance in less than 10 per cent of the days shows enormous fiscal stress. The financial condition turned worse to such an extent that the government is now forced to depend on loans even to meet day-to-day expenses.”

The White Paper stated that the BRS government created 17 SPVs, corporations and institutions that totally raised Rs 1,85,029 crore in off-budget borrowings, but as these institutions do not have sufficient revenue to service the debt, the government is supporting them to pay back principal and interest.

“As of today, the total outstanding debt in this category is Rs 1,27,208 crore. Even though, legally and technically, this debt is not on the books of the state government, it should be included in the total debt burden of the state, as it is being serviced by the state government,” it stated.

Another 15 SPVs, corporations and institutions raised Rs 1,18,557 crore through off-budget borrowings, which are guaranteed by the government. “As these institutions have revenue to service the debt, they can pay back the principal and interest. As of today, the total outstanding debt in this category is Rs 95,462 crore,” it stated.

The White Paper read: “There also exists a third category of loans taken by corporations that are not guaranteed by the government. These loans are also repaid by the corporations themselves without any debt servicing burden on the government. As of today, the total outstanding debt in this category is Rs 59, 414 crore.”

The White Paper stated that huge debt was incurred due to the Kaleshwaram Lift Irrigation Scheme, the brainchild of former chief minister K. Chandrashekar Rao, at Rs 97,449 crore at an interest rate of 9.69 per cent. “Of this, Rs 79,287 crore was already disbursed. The outstanding loan stands at Rs 74,590 crore,” it stated.

The water supply scheme, Mission Bhagiratha, also figured prominently.

“For Mission Bhagiratha, the government mobilised '20,200 crore. It raised another Rs 14,060 crore through TS Water Resources Development Corporation, Rs 6,470 crore through TS Housing Corporation and Rs 2,951 crore through TS Road Development Corporation,” the White Paper stated.

Telangana 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 paper noted.

The debt to GSDP (gross state domestic product) ratio has gone up by more than 12 percentage points, to 27.8 per cent in 2023-24, as against 15.7 per cent in 2015-16. “As a result of the mounting debts, the share of debt servicing has gone up enormously to 34 per cent, leaving a little headroom for capital expenditure,” it said.

This implied that the debt servicing burden was alone consuming 34 per cent of the state’s revenue receipts, with salaries and pensions of employees consuming another 35 per cent.

“This committed expenditure has meant that very little fiscal space is available for undertaking any welfare measure for the poorer sections of the society and growth enhancement measures for the development of the economy,” the White Paper stated.

A careful analysis of the White Paper showed that Telangana state which was a revenue-surplus state in 2014 and had one of the fastest-growing economies in the country, is now starting at a debt crisis.

 

Total debt

Rs 72,658 crore was debt in 2014

Rs 6.71 lakh crore is debt in 2023

 

Debt service burden

Rs 6,954 crore in 2014-15

Rs 32,939 crore in 2023-24

22% is the annual growth rate

 

Debt to GSDP ratio

12 percentage points increase

15.7% in 2015-16

27.8% in 2023-24

 

Major expenses

Kaleshwaram Lift Irrigation Scheme: Loan of Rs 97,449 crore at an interest rate of 9.69 per cent. Of this, Rs 79,287 crore disbursed; the outstanding loan is Rs 74,590 crore.

Mission Bhagiratha: The government mobilised Rs 20,200 crore, raised Rs 14,060 crore through TS Water Resources Development Corporation, Rs 6,470 crore through TS Housing Corporation and Rs 2,951 crore through TS Road Development Corporation