: Telangana loan cap slashed despite strong finances #IndiaNEWS #News Hyderabad: In what appears to be a politically-motivated move to stall Telangana’s development, the union Finance Ministry has
Telangana loan cap slashed despite strong finances #IndiaNEWS #News
Hyderabad: In what appears to be a politically-motivated move to stall Telangana’s development, the union Finance Ministry has reduced the State’s open market borrowing limit by Rs 19,000 crore for this fiscal.
Telangana will be able to raise only Rs 34,970 crore in 2022-23 as against the Rs 53,970 crore Fiscal Responsibility and Budget Management (FRBM) loan it proposed in the Budget. This, given Telangana’s standing among other States in terms of financial health, doesn’t seem to be based on its fiscal strength.
The RBI, in its June Bulletin, flagged 10 States with fragile financial conditions, and Telangana does not figure in that list. In fact, it fared far better than most States. Based on the debt-GSDP ratio in 2020-21, Punjab, Rajasthan, Kerala, West Bengal, Bihar, Andhra Pradesh, Jharkhand, Madhya Pradesh, Uttar Pradesh and Haryana have the highest debt burden. These 10 States accounted for around half of the total expenditure by all State governments in the country.
Other vulnerability indicators such as gross fiscal deficit to gross domestic product (GFD-GDP) ratios in these States were equal to or more than 3 per cent in 2021-22, besides deficit in their revenue accounts. The interest payment to revenue receipts (IP-RR) ratio, a measure of debt servicing burden on States’ revenues, in eight of these States was more than 10 per cent. Bihar, Kerala, Punjab, Rajasthan, and West Bengal are highly stressed States.
Andhra Pradesh, Bihar, Rajasthan and Punjab exceeded both debt and fiscal deficit targets for 2020-21 set by the 15th Finance Commission. Kerala, Jharkhand and West Bengal exceeded the debt target, while Madhya Pradesh overshot the fiscal deficit target. Haryana and Uttar Pradesh met both the criteria. Rajasthan, Kerala and West Bengal are projected to surpass the Finance Commission XV targets for debt and fiscal deficit in 2022-23.
The States own tax revenues (SGST, States’ excise duties and sales tax) of Madhya Pradesh, Punjab and Kerala have been declining over time, making them fiscally more vulnerable. For most of these States, non-tax revenue (general services, interest receipts and economic services) has remained volatile, dropping significantly in recent years. The declining own tax revenue and non-tax revenue affect the Statep&H^ [] H [[[[ܙXH Z[[HۈX]ܜ[ˈ[ H L[ H [XH] H Hو ][YH^ [] H
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