Telangana is in a state of fragile financial health: CAG report
The CAG said in the next 10 years, Telangana will have to repay ₹2.67 lakh crore as principal and interest on market borrowings
Alarming rise in total liabilities, unsustainability of debt repayments and mounting debt service burden indicate the fragile financial health of Telangana, the Comptroller and Audit General of India (CAG) observed in its report for the financial year 2022-23.
Tabled in the state legislative assembly by finance minister Mallu Bhatti Vikramarka on Friday, the report stated that the total outstanding liabilities of the state stood at ₹4.68 lakh crore by 2022-23. This includes ₹3.49 lakh crore of liabilities accounted for in the budget, besides another ₹1.18 lakh crore of off-budget borrowings.
“The outstanding loans account for 35.64% the state’s Gross State Domestic Product (GSDP), which is more than the permitted limit of 29.70% by the 15th Finance Commission,” the report said.
The CAG said in the next 10 years, Telangana will have to repay ₹2.67 lakh crore as principal and interest on market borrowings. “This figure does not include the ₹19,210 crore principal repayment due for borrowings from other financial institutions,” it said.
The state government facilitated ₹17,829 crore as further loans to entities — ₹8,696 crore towards interest payment, ₹3,531 crore towards principal repayment and ₹5,602 crore without any details whether it was interest payment or principal repayment in 2022-23 which are relatable to OBBs.
It said a significant portion of market borrowings was utilised for providing loans and advances to Public Sector Undertakings (PSUs), Special Purpose Vehicles (SPVs), and Autonomous Bodies (ABs) for servicing off-budget borrowings. “This practice raises concerns about the sustainability of the state’s debt,” the CAG report said.
The audit body said the overall debt sustainability suggests that the net public debt available to the government would be negative after considering the outgo on the servicing of the off-budget borrowings. “This may put significant pressure on the State finances and may push debt sustainability of the state to an undesirable level,” it said.
Stating that the financial situation of the state was worrisome with increasing debt levels and potential challenges in meeting repayment obligations, the CAG said the State government’s reliance on off-budget borrowings and the allocation of market borrowings for debt servicing raise questions about the long-term sustainability of its financial practices.
The CAG said the state had registered a revenue surplus of ₹5,944 crore after three years and the target for fiscal deficit was 5% of the GSDP by 2022-23.