HYDERABAD: The state government is on the brink of missing out on approximately Rs 5,000 crore in central funds due to an ongoing financial crunch, with the deadline for availing the Matching Grants Scheme (MGS) fast approaching.
Some key grants under the centrally sponsored scheme are set to expire by the end of this month, and unless the state releases the necessary matching funds, the central funds would lapse.
The Matching Grants Scheme is a collaborative funding mechanism where the central government and the states share the cost of various development projects.
The scheme offers a range of funding ratios, from 20 percent to 80 percent, depending on the project. This system aims to bolster infrastructure and development activities by providing states with additional financial support.
However, the state government’s inability to meet its contribution has put the funding at risk. According to highly placed sources, the Centre has made it clear that there will be “no extension” of the deadline, despite repeated requests from the state.
Concerns have been raised by the Centre regarding the potential mismatch between the projected and actuals of the Central finances, making any further delay in releasing matching funds unfeasible.
Sources indicate that the state could secure around Rs 5,000 crore from the central government, provided it contributes its share of approximately Rs 1,200 crore in matching funds.
Even as Chief Minister A Revanth Reddy’s government wants to make use of all the possible funds from the Centre, the shortage of funds has hamstrung the state from furnishing its share.
As the previous BRS government had bequeathed debts, the incumbent Congress dispensation has to pay a lion’s share of its revenues towards repaying debts and interest.
The previous BRS government also had failed to avail a substantial portion of the central matching grants. Between 2014 and 2024, the BRS government reportedly did not release 42 percent of the required matching funds, forfeiting a significant portion of the Rs 10,170 crore available through the scheme. This shortfall in releasing matching funds has left a lasting legacy, with the current government struggling to repair the damage.
As the deadline for the Matching Grants Scheme approaches, the financial constraints faced by the state government threaten to derail its development agenda. The loss of these funds would have far-reaching implications, like stalling crucial developmental projects.