VIJAYAWADA: Painting a grim picture of the State finances on the eve of the budget session, Finance Minister Buggana Rajendranath Reddy rued that the government was saddled with an outstanding debt burden of Rs 3.62 lakh crore and blamed the previous TDP regime for the crisis. The total liabilities included Rs 2.58 lakh crore, Rs 58,000 crore off-budget borrowings and pending dues to government departments.
The minister who released a white paper on the State finances on Wednesday alleged that the earlier government’s financial profligacy had led to the current mess.
“The financial situation, as it stands today, stands crippled, the biggest legacy of the previous government. The resources are limited, the debt servicing obligations are overwhelmingly huge and the vast unavoidable liabilities has placed the government in an unenviable situation. The present government has commenced its journey with liabilities to GSDP ratio of more than 35 per cent,” the finance minister said.
As per the white paper, the fiscal deficit ballooned from 2.11 per cent in 2013-14 to 4.42 per cent in 2016-17 in tandem with outstanding debt and liabilities, which reached an ‘unsustainable’ level of 27.87 per cent of GSDP. The provisional accounts of 2018-19 put the fiscal deficit at 3.67 per cent of the GSDP.
At the same time, the revenue deficit between 2014 and 2019, which was projected at Rs 22,113 crore by the 14th Finance Commission, stood at a whopping Rs 66,362 crore. The reason for this, the white paper noted, was that the Chandrababu Naidu-led government used the borrowed funds for revenue expenditure, thus substantially reducing the resource availability for capital investment.
Citing examples of the TDP government’s profligacy, Buggana explained that Rs 4,800 crore, availed as working capital financing through civil supplies department, was diverted for Pasupu Kumkuma and others.
Similarly, Rs 3,000 crore budgetary allocation made to the civil supplies department last year, was not released, as it was used for other purposes. Even as the capital expenditure stagnated at 11 per cent in the last five years, against the 18 per cent during the YS Rajasekhara Reddy’s regime in 2006-07.
The underperformance of the State government in tax collection too added to the increasing revenue deficit. The State’s own revenue was 23.5 per cent to 31.1 per cent lower than the projections made by the 14th Finance Commission. “The State suffered a double whammy during the past five years as the capital investment decreased on one hand and, on the other, inflated estimates, opaque procurement to award contracts added to the crisis,” the white paper noted.
The minister said that the State, in the last 20 years, performed well only during YS Rajasekhara Reddy’s regime in 2004 and 2009, even as the TDP decried saying that the YSRC should give credit where it was due as development happened prior to 2004 too.
On the way forward regarding wriggling out of the financial crisis and mobilising funds to implement the poll promises, even though the finance minister said the YSRC government would go boldly by adopting a positive approach, he did not go into the specifics. “The damage can’t be undone in a year or two. It requires time. However, we will face it boldly. We have our existing revenue resources and we will see an increase in revenue gradually. We will give importance to human capital development. Regarding the implementation of the poll promises, it will be unveiled in a couple of days,” he said, without elaborating.
‘TDP govt fudged figures’
Punching holes in the TDP’s claims of high growth rate in the last five years, Finance Minister Buggana Rajendranath Reddy suggested that the previous government fudged the numbers to project a rosy picture. All the sectors performed below par, but registered high numbers as the growth rates calculated by the Chandrababu Naidu government were based on non-standardised measurement parameters.