Finance Minister T. Harish Rao and officials of the Finance Department met Chief Minister K.K. Chandrasekhar Rao met. , Photo credit: The Hindu
TeaTelangana government has introduced An ambitious budget with a total outlay of ₹2.9 lakh crore for the new financial year. The budget has estimated a revenue of ₹2.16 lakh crore, which is ₹40,0000 crore more than ₹1.76 lakh crore in the Revised Estimates. There is no clarity on how the government proposes to raise resources by around 20%, especially as it may be ill-equipped to raise taxes or duties during an election year. The state is set to go into full-fledged election mode in the next few months.
By the end of February, there was a huge shortfall in grant aid as well as open market borrowings. The Union Finance Ministry cut the state’s eligibility to borrow more than Rs 15,000 crore from the open market in the recently concluded financial year, citing prudence in finance-related issues as the reason. Grants-in-aid were estimated at ₹41,001 crore in the budget estimates for 2022-23, but the actual estimate by the end of February was ₹9,324 crore, which is less than one-fourth of the estimates. The State is not likely to receive any sizeable amount under the head even during April. Market borrowing was pegged at ₹52,167 crore, but actual borrowing ended up at ₹39,859 crore – a difference of close to ₹13,000 crore. With the deficit of the two heads amounting to around Rs 40,000 crore, doubts remain over the achievement of targets for the new financial year, especially since the restrictions imposed by the Center are unlikely to be relaxed.
Grants-in-aid and contributions during the 2021-22 financial year were also short at ₹8,619 crore against an estimated ₹38,669 crore, according to provisional data submitted to the Comptroller and Auditor General of India. Revenue by way of grants-in-aid and contributions was higher than the estimated amount in 2020-21, at ₹15,471 crore as against ₹10,525 crore, but this was largely due to revenue COVID-19 pandemic, to enable the state to meet the shortfall in revenue. It is surprising that the government therefore went ahead with higher projections for the subsequent two years. Grants-in-aid and contributions for the new financial year are also estimated at an all-time high of Rs 41,259 crore. “We have claimed our dues. Asked about the projection, a senior finance department official said, “We cannot reduce the estimates as the Center had not released our dues.”
In conjunction with this, the government has added a new item – inter-state settlement – in next year’s budget with an estimated revenue of Rs 17,828 crore. The state believes that this is possible with the contribution of electricity dues from the neighboring state of Andhra Pradesh.
Total revenue receipts stood at Rs 1.33 lakh crore at the end of February, much lower than Rs 1.93 lakh crore estimated in the Budget Estimates and Rs 1.75 lakh crore in the Revised Estimates for FY 2022-23.
With no respite from the restrictions imposed by the Union finance ministry in raising resources and little scope to raise taxes or duties, the government is focusing on raising resources through other means, including the sale of land in key sectors. The Cabinet Sub-Committee on Resource Mobilization aims to raise resources through means other than debt and open market borrowings. Instructions have reportedly been issued to district-level officials to plan resource mobilization in their respective jurisdictions, including sale of prime land, to meet commitments such as Rythu Bandhu and Dalit Bandhu for which Rs 16,000 crore and Rs 17,700 crore have been allocated respectively in the estimated budget. The state government also needs to constitute the next Pay Revision Commission as the term of the previous commission headed by retired bureaucrat CR Biswal is expiring this year. The government will have to constitute the commission at least during the next financial year and consider implementing some of the recommendations of the commission in the coming months. All this means more burden on the exchequer.
Officials claim that there will be a significant increase in accrued expenses as the focus is on improving internal efficiency, but whether this alone will be able to bridge the huge gap of a few thousand crore rupees is a moot question. It would have been better for the state government to focus on presenting a more realistic picture rather than opting for inflated estimates.