Telangana on V-shaped recovery, but growing fiscal deficit a cause for concern

[Ryzen_renoir]

Telangana, like any other State in the country, was hit hard by the Covid pandemic. But, the government says, it is on a V-shaped recovery, led by a sharp growth in the primary sector and State’s revenues coming back to the pre-pandemic level sooner than expected.

The Socio-Economic Outlook for 2021 outlines how the State waded through the crisis-ridden 2020-21 and comes back on a growth trajectory in a few months.
 

“In 2020-21, economic output, measured by Gross State Domestic Product (GSDP) was ₹9.78 lakh crore. It only fell by 1.26 per cent in 2011-12 prices. In comparison, the real economic output at the national level fell by 8 per cent,” the report said.

The resilience was led by the agriculture and allied sectors, which grew by 20.9 per cent as against the national average growth of 3 per cent.

But what is worrying is the mounting fiscal deficit. The Budget Estimates for 2021-22 has pegged the fiscal deficit at ₹45,509 crore.

Interestingly, the revised estimates put the fiscal deficit for 2020-21 at ₹42,399 crore, about ₹11,000 crore more than the estimated fiscal deficit of ₹33,191 crore for the year.

Additional borrowings

A steep fall in revenues in the first quarter of 2020-21 pushed the government to go for heavy borrowings to fund welfare schemes such as Rythu Bandhu and old age pensions. It also spent about ₹5,000 crore on revving up healthcare infrastructure to tackle the pandemic.

It raised an additional borrowings of about ₹18,000 crore, using the leeway given by the Centre in terms of FRBM (Fiscal Responsibility and Budget Management) limits.

The government contends that the State has the wherewithal to service the debts and keep the finances well under control. It points that the State recorded the highest annual tax growth rate of 16.6 per cent during the period 2014-19.

“Between 2016-17 and 2018-19, the State’s tax to GSDP ratio was the highest in India GS (general States) at 7.5 per cent against an average of 6.3 per cent for India GS,” the report said.

The State’s average debt to GSDP ratio is 21.1 per cent as against 27.3 per cent of India GS.

Drop in tax share

The report said the share of Telangana in the divisible pool of taxes has come down from 2.43 per cent in 2015-20 to 2.13 per cent in 2020-21. It has now further come down to 2.10 per cent during 2021-26, which will result in a loss of Rs 14,151 crore to the State.

V-shape growth in revenues

The pandemic has resulted in a sharp reduction in tax revenues for the State. The SOTR (State’s Own Tax Revenue) collections in April 2020 fell by 87.7 per cent (as compared to tax revenues in April 2019).

Similarly, it fell by 50.8 per cent in May 2020. However, after hitting a low in April and May, the tax revenues witnessed a steady recovery. “By June 2020, SOTR collections have recovered and reached the levels registered in June 2019. The State collected ₹36,806 crore in SOTR between April and December 2020, which was 9.4 per cent lower when compared to the SOTR collected in the same period the previous year,” the report said.

The same trend continued with all major tax streams such as State Goods and Services Tax (SGST), Stamps and Registration fees, Motor Vehicle Tax and Excise.

[Mirage]

@Sachin200

[gallikukka]

maaku nammakam ledhu dora

10 yrs power lo G kadhapakunda koorchoni irrigation sector , welfare muchata thappa growth and development muchata asalu lene ledhu gaa

undhi gaaa white elephant HYD , daani piyyi ammukoni bathikesthundhi govt 

[manadonga]

Maa andhra di kooda veyyi 

[kittaya]

2 hours ago, gallikukka said:

maaku nammakam ledhu dora

10 yrs power lo G kadhapakunda koorchoni irrigation sector , welfare muchata thappa growth and development muchata asalu lene ledhu gaa

undhi gaaa white elephant HYD , daani piyyi ammukoni bathikesthundhi govt 

developed areas lo em develop chestharu... they are developing... how we need to eat the income anedhi

[Ryzen_renoir]

2 hours ago, manadonga said:

Maa andhra di kooda veyyi 

Naya bihar budget session start avaledhu inka

[Sachin200]

15 hours ago, Mirage said:

@Sachin200

Ayitey kg to pg free education start pedatada chinna dora ?

Free schemes unantha varaku kastam ee state governments ki , jagga gadu ayitey top position lo untadu 

 

 

As per the revised estimates for 2020-21, the overall debt was Rs 2,45,282 crore, slightly more than the 25 per cent cap at 25.07 per cent.

 The debt burden of state government has been consistently increasing. In 2018-19, it stood at Rs1,75,281 crore, which increased to Rs 2,05,858.33 crore in 2019-20. It further increased to Rs 2,45,282 crore in 2020-21 and Thursday’s Budget pegs the overall debt at Rs 2,86,804 crore.

 This apart, the government proposes to borrow Rs 32,561 crore through various corporations by giving bank guarantees. Of this, Rs 14,562 crore will be raised for irrigation projects, Rs 12,503 crore for Mission Bhagiratha and Rs 5,495 crore to meet financial needs.