The Telangana government will have to repay ₹252,048 crore as principal and interest on the market borrowings by 2032-33, on account of the indiscriminate borrowings resorted to by the previous Bharat Rashtra Samithi (BRS) government till 2021-22.
This was pointed out by the Comptroller and Auditor General (CAG) of India in its audit findings of the state government up to 2021-22. The audit report was tabled in the state legislative assembly on Thursday. “The huge debt servicing on the market borrowings will put significant pressure on the government finances,” the reports said.
The CAG pointed out that the state had an outstanding liabilities of ₹3,14,663 crore at the end of 2021-22 fiscal year. Besides, the state is also liable to pay principal and interest on account of its Off-Budget Borrowings (OBB) to an extent of ₹1,18,955 crore.
“Taking into consideration the OBB and other liabilities that are being serviced out of the state budget, the ratio of debt to GSDP would be 37.77%, which is 12.77% higher than the set target of 25% as per the Telangana State Fiscal Responsibility and Budget Management Act. This is also 8.47% above the norms of 29.30% as prescribed by the 15th Finance Commission,” the CAG report said.
The CAG said the OBBs of ₹1,18,955 crore has to be serviced from out of the state’s own resources. Major portion of the OBBs ( ₹66,854 crore) belongs to Kaleshwaram Irrigation Project Corporation Limited (KIPCL). The maximum repayment spread period of OBBs is 14 years and future liability on Kaleshwaram project towards debt servicing would work out to ₹1,41,545 crore for next 14 years.
{{/usCountry}}The CAG said the OBBs of ₹1,18,955 crore has to be serviced from out of the state’s own resources. Major portion of the OBBs ( ₹66,854 crore) belongs to Kaleshwaram Irrigation Project Corporation Limited (KIPCL). The maximum repayment spread period of OBBs is 14 years and future liability on Kaleshwaram project towards debt servicing would work out to ₹1,41,545 crore for next 14 years.
{{/usCountry}}“In view of the confirmation by KIPCL that it had borrowed on behalf of the state government and as the Detailed Project Report of the Kaleshwaram Project did not envisage any revenue streams, it is likely that the onus of bearing these huge liabilities would have to be borne by the state government, which will constitute huge burden on state finances, constraining the capacity of state to have any developmental plans in near future. As the state registered a revenue deficit, it had to finance this revenue deficit from market borrowings alone,” it said.
The CAG found fault with the previous government for not spending budgetary allocations to various welfare schemes, despite resorting to huge borrowings.
The CAG pointed out that the “Telangana Dalit Bandhu” initiative, under which each eligible Dalit family would get a lump sum amount of ₹10 lakh to take up self-employment schemes, was launched in August 2021 and was allocated ₹4,442 crore in the budget till 2021-22.
However, the CAG audit report found that actual expenditure was only ₹2,101 crore as of March 31, 2022; and the remaining amount was lying in the bank accounts of Telangana Scheduled Caste Cooperative Development Corporation Limited and district administrations. “Despite availability of funds, out of 38, 511 applications received for Dalit Bandhu, only 21,339 applications were sanctioned as of March 2022,” the report said.
The previous government also made major allocations to other welfare schemes such as debt relief to farmers and construction of double bedroom houses to the rural poor and urban poor. “But entire provisions remained unspent in respect of Hyderabad Urban Agglomeration ( ₹2,600 crore), double bedroom houses ( ₹2,320 crore) and Most Backward Classes Development Corporation ( ₹500 crore).
The CAG pointed out that during 2021-22, the Gross State Domestic Product (GSDP) of Telangana registered a higher growth rate than the previous year as the economy improved after a slowdown due to the Covid-19 pandemic. The revenue receipts increased by ₹26,555 crore (26%) while revenue expenditure increased by ₹13,592 crore (11%) over the previous year.
The state’s own tax revenue went up to ₹91,271 crore (increase of 26%), while non-tax Revenue ( ₹8,858 crore) and Central tax transfers ( ₹18,721 crore) also increased by 46% and 48% respectively when compared to preceding year.
The CAG report said despite increased revenue receipts, the state government failed to register a revenue surplus for a third consecutive year. The revenue deficit ( ₹9,335 crore) was understated by ₹1,157 crore due to non-discharge of interest liabilities.