HYDERABAD: The white paper on state finances tabled in the Legislative Assembly on Wednesday paints a bleak picture of Telangana’s fiscal situation as it says that the total accumulated debts are Rs 6,71,757 crore as of date.
Most of this debt was raised in the last 10 years, it said. The white paper highlighted that the state requires Rs 1,59,940 crore to complete ongoing works, of which Rs 86,957 crore has to be allocated in the Budget in the coming years.
Initiating the short discussion on the white paper, Deputy Chief Minister Mallu Bhatti Vikramarka, who also holds the Finance portfolio, said that the aim of the white paper was to know the current financial situation and start the journey afresh. “We have no enmity towards anyone. We wanted to end the financial misrule and correct it. At present, the state is borrowing money to repay its debts. I appeal to Opposition parties to cooperate with the government to set things right,” Vikramarka said. He said that the government considers Opposition parties as political opponents and not enemies.
The white paper stated: “Telangana state, which was a revenue surplus state in 2014 and has one of the fastest growing economies in the country, is now staring at a debt crisis. The rate of accumulation of debt from off-budget borrowings has led to this situation. Every effort will be made to increase the state’s resources and direct expenditures toward uplifting the impoverished while reducing unnecessary spending. The new government is determined to implement all the six guarantees which are promised by the party based on which the people of Telangana had given the mandate for change.”
“The government is determined to overcome the fiscal challenges in a responsible, prudent and transparent manner. The white paper on state finances is the first step in this direction,” it said.
Explaining the white paper, Vikramarka said that the BRS government depended more on Ways and Means and Overdrafts. There was no money with the BRS government and it even opted for Ways and Means to purchase diesel, he said.
Vikramarka described the 10-year rule of BRS as “Aardhika Araachakam”. He also said that apart from the Kaleshwaram Lift Irrigation Scheme, there was a need to probe irregularities in Mission Bhagiratha, the piped drinking water scheme.
Some ST hamlets did not get drinking water under the scheme, yet the BRS government presented a picture that drinking water schemes never existed before 2014, he said. “Off-budget borrowings for these schemes have high interest rates. The debt burden in the last 70 years was Rs 70,000 crore, but it increased to Rs 7 lakh crore in the 10-year rule of the BRS government,” Vikramarka said.
‘By borrowing Rs 7L cr, BRS failed to create assets’
The minister said that though revenues were less in undivided AP, the then AP government created a lot of assets. “But, by borrowing close to Rs 7 lakh crore, the BRS government failed to create assets. Where did the borrowed money go?” he wondered.
The white paper also focused on this aspect: “In undivided Andhra Pradesh, over a period of 57 years, an amount of Rs 4.98 lakh crore was spent for development of Telangana region. With this money, substantial and tangible assets in terms of roads, irrigation projects, educational institutions, hospitals and power projects were created. In addition, the state gave lands and incentives to central public sector undertakings, and defence establishments, thus paving the way for Hyderabad to be a pharma, defence and IT major in India.
In contrast, after the formation of the state, in the last 10 years, the total debt of the state and the SPVs has gone up to Rs 6,71,757 crore from Rs 72,658 crore in 2014-15.
This gigantic increase in debt (almost 10 times) has created enormous fiscal stress on the state’s finances in terms of its ability to service the debt. Further, no tangible fiscal assets in proportion to the money spent were created in the past 10 years”.
OD and WAM
The white paper stated that due to the increased fiscal stress, the state has to depend upon the Ways and Means and advances from the RBI on a daily basis. From a situation where Telangana had positive balances for all 100% of the days in 2014 to a situation where the state has positive balances in less than 10% of the days - shows the enormous fiscal stress. Consequently, the state has not been able to spend enough money on critical sectors such as education and health where the budgeted amount as the proportion of the total expenditure is amongst the lowest in the country.