TS debt swells nearly 10x to Rs6.71 trn in 10 yrs

The BRS government claimed that Kaleshwaram project was built at Rs80,000 crore, but actual Kaleshwaram Corporation’s debt itself is Rs97,449crore. BRS (then TRS) government went for loans stating Kaleshwaram would be a water-based business proposition with estimated annual revenue of Rs5,000cr - A Revanth Reddy, Telangana Chief Minister

Mounting Debt Load

• Debt consuming 34% of revenue receipts
• Salaries and pensions consume another 35% revenue receipts
• Committed expenditure leaving very little fiscal space for economy development

Hyderabad: Telangana State’s total debt has gone up almost 10 times to reach Rs6,71,757 crore in 2023-24 financial year from Rs72,658 crore in FY 2014-15 in the last 10 years, as per the White Paper on State Finances presented by Bhatti Vikramarka Mallu, Deputy Chief Minister (Finance, Planning and Energy) in the Legislative Assembly on Wednesday. According to it, this gigantic increase in the debt has created an enormous fiscal stress on the State’s finances in terms of its ability to service the debt. Further, no tangible fiscal assets in proportion to the money spent were created in the past 10 years. The debt servicing burden of monies which are borrowed on the budget and off-budget has increased enormously.

The White Paper revealed that the debt is consuming 34 per cent of the State’s revenue receipts. Further, the salaries and pensions of employees consume another 35 per cent of the State revenue receipts. This committed expenditure has meant that very little fiscal space is available for undertaking any welfare measures for the poor and growth enhancement measures for the economic development.

Due to the increased fiscal stress, the State has to depend upon the ways and means advances from the RBI on a daily basis. From a situation where the state had positive balances for all the 100 per cent of the days in 2014 to a situation where the state has positive balances in less than 10 per cent of the days - shows the enormous fiscal stress. Consequently, the State 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.

In Telangana, there is a gap of almost 20 per cent between the budgeted and the actual expenditure. This figure is not only high when compared to other States, but also in comparison to the expenditure achieved in the united Andhra Pradesh. This gap in expenditure between the budget and actuals has meant that there is an accumulation of committed expenditure in terms of payments made for the services rendered by the suppliers and contractors and also to the employees.

Further, there is a huge gap between the budgeted and actual money spent on major welfare schemes such as Dalita Bandhu and other welfare programs aimed at the welfare of ST, BC and minorities. In united Andhra Pradesh, over a period of 57 years, an amount of Rs 4.98 lakh crore was spent for development of Telangana region. With this money, substantial and tangible assets in terms of roads, irrigation projects, educational institutions, hospitals and power projects were created. In addition, the state facilitated - by giving lands and incentives to central public sector undertakings, defense establishments, thus paving the way for Hyderabad to be a pharma, defense and IT major in India. “A careful analysis of the facts shows that Telangana, which was a revenue surplus State in 2014 and has one of the fastest growing economies in the country is now staring at a debt crisis. The rate of accumulation of the debt from off-budget borrowings has led to this situation. Every effort will be made to increase the State’s resources and direct expenditures toward uplifting the impoverished, while reducing unnecessary spending,” Deputy CM said in a statement.

“The new government is determined to implement all the six guarantees which are promised by the party based on which the people of Telangana had given the mandate for change. The Government is determined to overcome the fiscal challenges in a responsible, prudent and transparent manner. The white paper on state finances is the first step in this direction,” it added.

Meanwhile, Telangana Chief Minister A Revanth Reddy lambasted BRS leaders for misleading people on the amount spent on Kaleshwaram project when they were in power.

“The then BRS government claimed that Kaleshwaram project was built at Rs80,000 crore, but actual Kaleshwaram Corporation’s debt itself is Rs97,449crore. BRS (then TRS) government went for loans stating Kaleshwaram would be a water-based business proposition with estimated annual revenue of Rs5,000cr,” Revanth Reddy said in the Assembly during the discussion on the White Paper. TRS further said that government would earn Rs5,700cr from Mission Bhagiratha. Heavy debt at unreasonable interest rate keeps Telangana in a vicious circle of debt, he pointed out.