State borrowings within FRBM limits: Harish Rao

Hyderabad: Finance Minister T Harish Rao lambasted the Centre for not devolving funds due to the States and instead, asking them to borrow loans to meet the expenditures amid the Covid pandemic.

Instead of devolving Rs 1,435 crore due to Telangana State for 2018-19, the Union government issued permission to seek loans for an equivalent amount, he said, and ridiculed the Centre’s restrictions imposed on States for borrowing up to five per cent of the GSDP (gross state domestic product) under the Fiscal Responsibility and Budgement Management (FRBM) Act to bridge the fiscal deficit.

The Minister said the Telangana State FRBM Amendment Bill 2020 was introduced in the State Assembly on Monday as per the Central government’s guidelines to avail two per cent additional borrowings as the State had already reached its existing borrowing limit of three per cent.

He said the Centre imposed conditions to avail the additional two per cent borrowings which will be applicable only for the current financial year.

Explaining further, Harish Rao said Telangana was ranked 28th among 29 States in the country in terms of borrowings from various financial institutions. He reiterated that the loans were being obtained in strict adherence with the FRBM regulations and the State was compelled to increase the FRBM limits considering the lack of revenue during the pandemic.

The borrowings would be spent on infrastructure development and also to provide for State guarantees to government agencies to obtain loans towards capital expenditure.

The Minister said the national GDP fell from 8.18 per cent in fourth quarter of 2017-18 to minus 23.9 per cent in second quarter of 2020-21. However, Telangana achieved GSDP growth rate of 12.6 per cent in 2019-20 which reduced to two per cent due to the pandemic and also the Centre’s failure to devolve taxes to the State.

“The State’s GSDP has increased from Rs 4.52 lakh crore before 2014 to Rs 11.5 lakh crore this year, whereas, the State’s borrowings stood at Rs 1.54 lakh crore,” he said. He said the State had cleared loans of Rs 34, 296 crore in the last five years.

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