Jaitley's FRBM Move Keeps Telangana's Hopes Alive

The central government’s decision to constitute a committee on Fiscal Responsibility and Budget Management (FRBM) Act came as a relief to the state.

Published: 01st March 2016 05:32 AM  |   Last Updated: 01st March 2016 05:32 AM   |  A+A-

HYDERABAD: Though the state government seems to be unhappy with the Centre for not increasing the borrowing limit, which would have allowed the state to borrow Rs 5,000 crore more for the 2015-16 and 2016-17 Budgets, the central government’s decision to constitute a committee on Fiscal Responsibility and Budget Management (FRBM) Act came as a relief to the state.

However, there is no time frame for the central government’s committee to submit its report on FRBM.

The 14th Finance Commission recommended 0.5 per cent extra over GSDP for state’s borrowings.

The increase in the existing limit of 3 per cent to 3.5 per cent in FRBM would allow the state to borrow Rs 2,500 crore more as the state’s GSDP is around Rs 5 lakh crore.

However, presenting the budget on Monday, Union finance minister Arun Jaitley  announced setting up of a committee to review the Fiscal Responsibility and Budget Management (FRBM) Act and determine whether there should be a range for fiscal deficit targets, rather than set numbers, to provide necessary policy space to governments.

The state has submitted umpteen representations to the central government to increase the FRBM limit from 3 to 3.5 per cent of the GSDP.

Jaitley.jpgTelangana, Gujarat and Karnataka have met the norms for an increase in the FRBM limit by 0.5 per cent.

The constitution of the committee was a temporary setback to the new state which was hoping high on developmental works through borrowings, the sources said.

Chief Minister K Chandrasekhar Rao watched the Union finance minister’s budget presentation live at his camp office. Later, he discussed with principal finance secretary K Ramakrishna Rao and other officials on the grants and financial assistance the state would likely to get in the Union Budget. Rao assessed the likely impact of the Union Budget on the state and also analysed the benefits to the state.

The central-assisted schemes, the state’s share in central taxes and other financial assistance that the state is likely to get were discussed.

The chief minister, who has been conducting pre-budget exercises, came to a broad understanding on the state budget size, it is learnt.

“The state budget size will be around Rs 1.25 lakh crore to Rs 1.3 lakh crore,” Rao  came to an assessment after the meeting. Later, Chief minister KCR also gave a direction on priorities of state government and in which sectors the state could tap the central finances, the sources said.

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