HYDERABAD: It’s a ‘double whammy’ for the state government financially this year, with a drastic fall in revenues to be received from the Central government and the economic slowdown impacting the revenues of the State too.
Thus, the size of the state’s Budget for 2019-2020 has been slashed by 20 per cent, and was pegged at Rs 1.46 lakh crore over the vote-on-account Budget of Rs 1.82 lakh crore presented in February. The size of the Budget was earlier expected to come down by eight to 12 per cent.
“Compare (it) with the revised Budget estimate of 2018-19, which is Rs 1,61,607.06 crore. That is why we want to be realistic. The Budget size is pegged at Rs 1,46,544.78 crore,” an official explained. As against the revised 2018-19 estimates, the Budget for 2019-20 was reduced by nine per cent.
However, the immediate impact of the ‘double whammy’ is that the state will not be able to take up new works involving the financial committee, at least for December. “No new commitments, please,” the Finance department has already requested all departments.
“We are expecting the financial situation to improve and witness a positive trend after December. We will review the financial situation at that time,” a senior official in the Finance department told Express. “For now, we need to be cautious in spending money,” the official added.
This means some key decisions, such as the announcement of the Pay Revision Commission (PRC) for the employees of the State government and the implementation of the unemployment dole to youngsters in the state, will be put on hold for the time being.
"I regret that I am presenting the State Budget at a time when the both the Centre and the State are going through a severe financial crisis", Chandrasekhar Rao said, while presenting the budget.
He recalled how GDP continued to be on a downward spiral. "In the first quarter of 2018-19 and from then on GDP was on the decline. In the second quarter, the GDP growth was seven per cent and in the third quarter it crashed to 6.6 per cent and in the fourth and final quarter, it touched 5.8 per cent. In the first quarter of this financial year, it further declined to five per cent. The slowdown was impacting all sectors," he said.
Meanwhile, Finance Minister T Harish Rao presented the Budget in the Legislative Council.
‘Confident of repaying loans’
Asked about the repayment of debts, sources said the state would face no problem. “The state never defaulted in paying debts. We are confident of repaying the loans,” officials said. From this year, the state govt has to spend Rs 2,000 crore annually on debt service for Mission Bhagiratha loans
TS could lose borrowing capacity under FRBM Act
When revenues witness a drastic fall, it will have a cascading affect on the State’s borrowing capacity too, from the next year. A fall in revenue means the Gross State Domestic Product (GSDP) too will witness negative growth. Thus, the state may lose its borrowing capacity under the Fiscal Responsibility and Budget Management (FRBM) Act. This will again impact the total spending of the state