Contractors have threatened to stop work is payments are not cleared
The failure of the government to seek approval for the Budget for 2014-15 in the Legislative Assembly till now is also said to be one of the reasons for the present crisis. (Photo: DC/File)
Hyderabad: The Telangana government is not in a position to pay Rs 2,290 crore bills, as its coffers are running dry. Shortfall in revenue collection, huge funds released to meet its populist schemes like crop loan waiver and purchasing electricity in the open market at higher rates are being cited as reasons for the financial crisis. Contractors have threatened to stop work on irrigation projects, roads and buildings, panchayat raj among others if their dues are not cleared by Monday.
“The government has stopped payment of bills amounting to Rs 1,500 crore for irrigation work, Rs 500 crore for roads and buildings work and Rs 200 crore for panchayat raj work. There are not enough funds in the treasury to pay the bills. The situation is worsening,” said a senior finance official.
The Telangana government had entered into contracts worth Rs 80,000 crore since Telangana was formed on June 2, mainly in sectors such as irrigation, roads and buildings, panchayat raj, rural water supply and municipal administration.
The failure of the government to seek approval for the Budget for 2014-15 in the Legislative Assembly till now is also said to be one of the reasons for the present crisis.
The government is currently running the show on a day-to-day basis by seeking special permission from the Governor to utilise the funds for emergency needs till the Budget gets approval in the Legislature. The government failed to convene the Budget session even after assuming office more than four months ago in June.
The available limited funds are being utilised to buy power by spending crores everyday besides for other welfare schemes. The government released Rs 4,250 crore for crop loan waiver for farmers on Sept. 30 to meet 25 per cent of their crop loan arrears. It also paid Rs 1,600 crore as salaries and pensions to its staff which imposed a heavy burden in Sept. The salaries for Sept. were paid in the same month in advance on account of Dasara on Oct. 3.
The government was forced to raise Rs 800 crore at an interest rate of 8.8 per cent in the open market this week through auction of bonds to tide over the crisis. However, it had to spend nearly Rs 120 crore within a week to purchase power at as high as Rs 8.50 per unit in the open market in the wake of severe power shortage in the state.
The finance department is under tremendous pressure over how to manage the show with empty coffers while various departments have been sending bills for payment amounting to hundreds of crores.
“We have already brought to the notice of the government the grave financial position and the need to bring financial discipline in spending among heads of departments. They are sending bills for payment without prioritising them. With this, there are no funds left for emergency needs,” said the official.
Finance minister Etela Rajendar took up the issue with Chief Minister K. Chandrasekhar Rao on Saturday. The CM is expected to hold a review meeting on the financial position with senior officials in a couple of days to discuss the measures that need to be taken to overcome the crisis.
( Source : dc correspondent )
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