HYDERABAD: The state government utilised only a portion of borrowed funds for capital expenditure, with some of the funds redirected towards loan repayments.
According to the Comptroller and Auditor General (CAG), the extent to which the fiscal deficit, represented by borrowed funds, has been channelled into capital asset creation is a key indicator of prudent financial management.
“The borrowings of Rs 50,528 crore in 2023–24 were partly used to meet capital expenditure of Rs 43,918 crore and disburse loans and advances worth Rs 6,610 crore,” the CAG stated.
Highlighting the importance of capital expenditure for sustained growth, the CAG noted that capital disbursements during 2023–24 amounted to Rs 43,918 crore, accounting for 2.92% of the Gross State Domestic Product (GSDP). However, the growth in capital expenditure has not kept pace with the steady increase in the GSDP.
Despite a shortfall in capital expenditure against budget estimates, a significant portion of the amount was allocated to irrigation projects.
“The capital expenditure incurred is classified into general services, social services and economic services. In 2023–24, 77% of the capital expenditure (Rs 33,937 crore) was directed towards economic services, 21% (Rs 9,116 crore) towards social services and the remaining 2% (Rs 865 crore) on general services. Of the amount spent on economic services, Rs 27,921 crore was allocated for various projects, including Rs 26,698 crore for major irrigation, Rs 275 crore for minor irrigation and Rs 948 crore for roads and bridges,” the CAG report stated.
TG’s reliance on borrowings
Despite claims of being a rich state, Telangana’s overdependence on borrowings was evident in 2023–24, with the government relying on financial assistance almost daily.
“Special Drawing Facility and Ways and Means Advances are taken from the Reserve Bank of India (RBI) to maintain the minimum cash balance that the State government is required to maintain with the RBI. During 2023–24, the Telangana government availed a Special Drawing Facility of Rs 10,156 crore for 349 days and Ways and Means Advances of Rs 52,517 crore for 321 days. By the end of the financial year, Rs 1,000 crore remained unpaid towards the Ways and Means Advances,” the report noted.
The government also relied on an overdraft facility when cash balances fell below the RBI’s prescribed limit of Rs 1.38 crore for Telangana. “During 2023–24, the government availed an overdraft of 35,425 crore for 145 days,” the report stated.
