Telangana lost Rs 15,033 cr due to Centre’s loan curbs: Harish

HYDERABAD: The Telangana government has suffered a loss of  Rs.15,033 crore the current fiscal (2022-23) as the Centre imposed restrictions on loans for the state under the FRBM Act, finance minister Harish Rao informed the state assembly on Tuesday.

Participating in a short discussion on the Centre’s “dual policy” vis-a-vis implementation of the FRBM Act and its impact on the state’s progress, the minister said the Centre owed TS Rs 1,05,812 crore in the form of pending funds, grants and compensation in the last eight years. 

“The Telangana government can clear one-third of its total debt of Rs 3.29 lakh crore if the Centre pays these dues to us. Let alone clearing debts, we would not even be required to seek fresh loans if the Centre released these funds to us," Rao said.

Accusing the Centre of unilaterally imposing restrictions on loans, he said, "The Telangana government is eligible to obtain loans of Rs 53,970 crore (3.5% of the GSDP) the current fiscal 2022-23 as per the FRBM Act through market borrowings. The union finance ministry recently communicated to TS that the NBC (net borrowing ceiling) for the state has been fixed at Rs 42,428 crore. If the restrictions on off-budget borrowings are also taken into account, the total loss for Telangana will be Rs 15,033 crore."

This apart, TS lost another Rs 6,104 crore for its refusal to implement power reforms which “burden the farmers and the poorer sections, he said, adding that the Centre offered to increase the 0.5% FRBM loan limit to only the states that implement power reforms. If this loss is also taken into account, the overall loss to Telangana on account of the Centre's restrictions will increase to Rs 17,336 crore, the finance minister said.

The Centre wants states to be 'financially weak'. “Without consulting the high-powered inter-governmental committee consisting of representatives of the Centre and states, the central government applied the modified FRBM norms only to states and that too with retrospective effect. And, the same was not made applicable to the Centre. This weakens the states financially,” Rao said.

He said the Centre unilaterally decided to consider off-budget loans obtained through corporations and PSUs as state government's debt if these loans are repaid from the state budget. The Centre also ignored the 15th Finance Commission’s recommendations to release Rs 6,268 crore to Telangana under various heads based on its performance, Rao said.

“Through GST implementation, PM Modi promised to increase the tax share of states from 32 to 42 per cent. In reality, by imposing more cesses, the Centre reduced the tax component to the state. While the Centre was earning around 22.26 per cent of its revenue through cesses and surcharges, the states are losing their revenue and ending up with only 29.6 per cent share in the taxes they are getting from the Centre,” he said.

Rao said the state spent the borrowings on capital expenditure and created assets. “We took up irrigation projects like Kaleshwaram, Mission Bhagiratha, Mission Kakatiya etc which in turn created assets for the state,” he said.

The finance minister said that as per the RBI report, Telangana’s debt was ranked at 23rd among 28 states. In the last eight years, Telangana assumed top position in terms of increase in state-owned tax-revenue, it registering a 11.5 per cent growth.

Odisha came second with 9.7 per cent, followed by Haryana with 9.2 per cent growth in tax revenue. Similarly, Telangana’s contribution to GDP increased from 4 per cent to 4.9 per cent in the last eight years, despite it having just 2.9 per cent of nation’s population.