Uncertainty hits Rythu Bharosa as Centre halts Telangana’s move for more borrowings

Denial of approvals for fresh borrowings, coupled with poor revenue, also spells doom for other schemes, including Indiramma houses, Indiramma Atmeeya Bharosa and ration cards

Hyderabad: Uncertainty looms large over the disbursement of financial assistance under the Rythu Bharosa investment support scheme initiated on Sunday, with the State government struggling to arrange the required Rs 8,400 crore during the current Yasangi season.

Despite Chief Minister A Revanth Reddy’s claims of disbursing the assistance by March 31, the Centre not approving the State’s proposal to raise Rs 10,000 crore for January through Open Market Borrowing (OMB) has come as a major shocker for the Congress government.

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The denial of approvals for fresh borrowings, coupled with poor revenue, also spells doom for other newly launched schemes, including Indiramma houses, Indiramma Atmeeya Bharosa and ration cards due to the unavailability of required funds. Official sources do not hesitate to attribute the uncertainty to thoughtless decisions of the State government without considering the implications.

The Centre had capped the State’s Open Market Borrowing (OMB) limit for 2024-25 at Rs 49,255.41 crore, significantly lower than the State’s proposed Rs 57,112 crore, which is in addition to Rs 3,900 crore from Central loans and another Rs 1,000 crore through other sources. However, the State had planned to raise Rs 30,000 crore through OMB in the final quarter of the current fiscal year, with indents submitted to the Reserve Bank of India (RBI) in December 2024.

The State was compelled to seek fresh borrowings as its borrowings and liabilities reached Rs 48,178.93 crore in December itself against the annual target of Rs 49,255.41 crore. Despite this, the government submitted indents for Rs 10,000 crore each for the next three months. While Rs 3,000 crore was secured on January 7, subsequent attempts for Rs 2,000 crore on January 14 and Rs 2,500 crore on January 21 were rejected due to lack of approvals.

The State government is now caught in a Catch-22 situation, with approvals for OMB resulting in the borrowing limit shooting beyond the permissible limits of Fiscal Responsibility and Budget Management (FRBM), while rejection leading to curtailing its expenditure for the current fiscal. Sources said though the State’s tax revenue has shown signs of improvement in January, it still falls short of last year’s revenue receipts by more than Rs 12,000 crore and is expected to fall short of the annual target.

“The decision to launch all four schemes was taken anticipating a green signal to raise more loans from the market. However, the shortfall of funds prompted the government to launch them only formally in one village per mandal. We are hopeful to complete the disbursement of the Rythu Bharosa amount by February. Funds required for extensive implementation of the remaining schemes are likely to be allocated in the next Budget for 2025-26, scheduled to be introduced next month,” a top official in the Finance Department told ‘Telangana Today’.

Meanwhile, farmers anxiously await clarity on the disbursement of Rythu Bharosa funds, critical for agricultural investments, as the government grapples with the mounting financial strain. The disbursement delay could have far-reaching implications, especially as the farming community depends heavily on timely financial support for the upcoming agricultural season.