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Setback to TG as Centre imposes Rs 4,200 crore cut in Jan loans

Hyderabad:The Centre has imposed a Rs 4,200-crore cut in open market borrowings for Telangana in January. The state government had sought to raise Rs 10,000 crore through open market borrowings in each of the last three months of fiscal 2024-25 (Jan to March) to meet increased expenditure on welfare schemes.

The government urged the Centre to allow it to raise `3,000 crore on January 7, Rs 2,000 crore on January 14, Rs 2,500 crore on January 21 and `2,500 crore on January 28 as state development loans (SDLs).

SDLs are bonds issued by the government to fund fiscal deficit and these bonds are auctioned by the Reserve Bank of India every month.

Data obtained from the finance department show that the Centre has granted approval to raise `3,000 crore on January 7 and `2,800 crore on January 28. It denied permission to raise loans on January 14 and January 21, the data shows. With this, the state government is facing a shortfall of `4,200 crore in January.

The state government has also sought permission to raise `3,000 crore on February 4, `2,000 crore on February 11, `2,500 crore on February 18, `2,500 crore on February 25, `3,000 crore on March 4, `2,500 crore on March 11, `2,000 crore on March 18 and `2,500 crore on March 25.

Going by the cuts imposed by the Centre in January, it is doubtful if the Centre will accept the state’s plea to raise `10,000 crore loans each in February and March.

The state government has proposed to `57,112 crore in open market borrowings in the Budget presented in July last. With its latest request to raise another `30,000 crore between January and March, the open market borrowings will increase to`70,759 crore, which is an excess of `13,647 crore over the Budget proposals.

But the Centre has slashed the loan limit to `49,255.41 crore, citing norms under the Fiscal Responsibility and Budget Management Act, which has resulted in a shortfall of `7,857 crore.

Of the `49,255.41 crore permissible limit, the government had raised `48,178.93 crore by December-end amounting to 97.81 per cent.

Having raised an additional `5,800 crore loans in January, the overall burden through open market borrowings has increased to `53,978 crore.

This has breached the FRBM limit set by the Centre and it remains to be seen how much the Centre will allow Telangana to borrow in February and March.

The government is struggling to mobilise the required funds due to a dip in tax and non-tax collections. By imposing cuts in January itself, the Centre has made it difficult for the state government to mobilise funds to implement for welfare schemes.

( Source : Deccan Chronicle )
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