HYDERABAD: The Reserve Bank of India (RBI)’s report on “State Finances - A Study of Budgets of 2024-25”, released on December 19, revealed the total Outstanding Guarantees (state governments issue guarantees on behalf of urban local bodies, cooperative institutions, and public sector enterprises) of the state government at Rs 2,14,705 crore at the end of March, 2023, and Rs 2,20,606 crore at the end of March, 2024.
These guarantees are in addition to the total outstanding liabilities of the state government which were reported as Rs 3,49,727 crore at the end of March, 2023, and Rs 3,93,286 crore at the end of March, 2024.
The annexure to the budget document for 2023-24, presented by the then finance minister T Harish Rao, showed outstanding guarantees of government at Rs 38,867 crore as on 31 January, 2023.
This figure of Rs 38,867 crore, the document noted, is based on assigning risks to Rs 1,29,243 crore outstanding guarantees provided to various SPVs/Corporations/Institutions.
However, the recent report of the RBI showed the total Outstanding Guarantees of the Telangana government at Rs 2,14,705 crore at the end of March, 2023, as against Rs 38,867 crore.
Chief Minister A Revanth Reddy, in the recent Assembly winter session, said that the BRS government showed only part of the outstanding guarantees, by assigning lower risks to guarantees provided to the corporations.
He gave an example of the guarantees given to Kaleshwaram Irrigation Project Corporation Limited which were shown as Rs 16,162 crore by assigning ‘risk weight’ of 25%, whereas the actual outstanding guarantees were Rs 64,651 crore.
Notably, a recent working group of RBI on the state government’s guarantees, which submitted its report on 16 January, 2024, also observed: “Some of the states are assigning risk weights that are much lower than 100 per cent, thereby, under-reporting the amount of guarantees issued.” This description exactly matches the budgets presented by the then finance minister T Harish Rao.
Additionally, the group recommends that “the minimum risk weight for any guarantee extended by the state government should be kept at 100 percent.”
In light of these recommendations, the annexure to the budget for 2024-25 on government guarantees and debt position assigned risk weights of 100 percent to all the outstanding guarantees given by the state government to SPVs/Corporations/Institutions.
This effectively brought the total outstanding guarantees of the Telangana government to Rs 2,20,606 crores at the end of March, 2024.