HYDERABAD: The corporations and authorities which the State has created to raise loans might administer fiscal shocks to the State government very soon, the Fifteenth Finance Commission (FFC) warned, while suggesting the government to account for the off-budget borrowings too. The loans raised by these bodies do not reflect in the State Budget books.
“The State has resorted to borrowings for critical social infrastructure like drinking water and irrigation. The interest payments for such huge off-budget borrowings (without a provision for cost recovery) is expected to create fiscal challenges very soon,” the Finance Commission Report said “The off-budget borrowings, though, need to be accounted for in order to avoid possible fiscal shocks,” the report added.
Besides, the FFC noted that the current level of loan debt repayments is also a cause of worry, which needs to be addressed promptly. “The interest repayment at 13 per cent of Total Revenue Expenditure (TRE) in 2018-19, is higher and growing fast,” the FFC noted.
However, the Finance Commission report lauded the State government’s work on updating land records.
“Besides Maharashtra, Telangana is the only State to have computerised 99 per cent of its land records data. Accurate and efficient direct benefit transfers depend in large measure on correct and updated land records information. Ensuring public access to land records online substantially reduces the risk of fraud and deception during land transactions,” the FFC observed.
Invest in urban centres
On the intra-State development, the FFC stated that of the 33 districts in Telangana, only four districts -- Rangareddy, Hyderabad, Medchal-Malkajgiri, and Sangareddy -- contribute 52 per cent of the Gross State Domestic Product (GSDP). All the secondary and tertiary activities are concentrated in these districts.
“Telangana should invest in the development of other urban centres in the interest of inclusive and balanced development across all districts,” the FFC suggested.
Stating that the incidence of unemployment (usual principal and subsidiary status) among persons aged 15 years and above was the fifth highest in Telangana among other States in 2017-18, the FFC suggested: “Thus, labour intensive sectors need to be promoted in the State to generate higher employment.”
Reform signposts
Though Telangana is among the developed States, in terms of per capita income, it is in fifth place in the country
Own revenue receipts (ORR) and total revenue receipts (TRR) are observed to be highest for Telangana (76.9%) followed by Maharashtra (76.1%) and Gujarat (70.4%)
2015 and 2019
Between 2015 and 2019, Telangana reported a healthy sign of higher trend growth rate (TGR) of own revenue receipts (ORR) of 11.1% than total revenue receipts (TRR) of 8.2%
86.6%
Of Telangana’s own revenue receipts (ORR) comes from own tax revenue (OTR), which is mostly drawn from the four Hyderabad-centric high growth districts
Revenues from stamp duty are very low (8% of own tax revenue against 15% of Maharashtra). This presents scope for vast improvement