Telangana far better than BJP-ruled States in fiscal prudence

Hyderabad: Despite the constant hurdles created by the Central government, Telangana continues to maintain fiscal prudence with its total outstanding liabilities much lower than several BJP-ruled States, busting the ‘double engine’ growth propaganda pushed by the saffron party. Countering the opposition parties’ allegations of increasing debts, the State government has all along been arguing that […]

Hyderabad: Despite the constant hurdles created by the Central government, Telangana continues to maintain fiscal prudence with its total outstanding liabilities much lower than several BJP-ruled States, busting the ‘double engine’ growth propaganda pushed by the saffron party.

Countering the opposition parties’ allegations of increasing debts, the State government has all along been arguing that the borrowings were spent towards capital expenditure and infrastructure development. While Telangana can boast of constructing Kaleshwaram project – the world’s largest lift irrigation scheme – besides several welfare programmes like Rythu Bandhu and Rythu Bima, other States can hardly match the State in terms of implementing welfare and development programmes.

In fact, Niti Aayog has repeatedly acknowledged Telangana’s financial prudence and discipline as it has been repaying loan installments in time.

Despite taking up several welfare and development programmes, Telangana’s debts were far lower than BJP-ruled States as is evident from the figures placed before the Parliament by union Finance Minister Nirmala Sitharaman on Monday. Till March 2022 end, Telangana’s total outstanding liabilities were Rs.3.12 lakh crore against Gujarat’s total outstanding liabilities of Rs 4.02 lakh crore, Karnataka’s Rs 4.61 lakh crore and Uttar Pradesh’s Rs.6.53 lakh crore.

In a written reply to MP Kishan Kapoor in the Lok Sabha, Nirmala Sitharaman said all States had enacted their Fiscal Responsibility and Budget Management (FRBM) Act. Compliance to the State FRBM Act is monitored by the respective State Legislatures.

She said the Department of Expenditure, Ministry of Finance, generally follows the fiscal limits mandated by the accepted recommendations of the Finance Commission while exercising the powers to approve borrowings by States.

This apart, the normal Net Borrowing Ceiling (NBC) of each State is fixed by the union Government in the beginning of each financial year. Adjustments for over-borrowing by States during the preceding years, if any, are made in the borrowing limits of subsequent year, she explained. However, instances of borrowings by certain State Public Sector companies, Special Purpose vehicles (SPVs) and other equivalent instruments, where principal and/or interest are to be serviced out of the State Budgets, had come to the notice of the Ministry of Finance.

Considering the impact of bypassing the NBC of States by such borrowings, in March early this year, it was decided that borrowings by State Public Sector companies or corporations, SPVs and other equivalent instruments, where principal and/or interest are to be serviced out of the State budgets and/or by assignment of taxes/cess or any other State’s revenue, would be considered as borrowings made by the State, she added.