Hyderabad: With only four weeks left for the end of the current financial year, the Telangana State and Andhra Pradesh governments are following different paths to reach their financial goals.
While the TS government is struggling to achieve a surplus budget by stopping all payments in order to save money, the AP government is spending money liberally to show a revenue deficit at the end of the current financial year.
The TS government won’t get additional borrowing permit from the central government unless it shows a surplus budget in the financial year. In the case of AP, it will not get resource gap funds from the central government as recommended by the 14th Finance Commission unless it shows revenue deficit in the current financial year.
The TS government’s 2017-18 Budget was Rs 1,39,441.67 crore and it projected Rs 4,571.31 crore surplus at the end of the current financial year. But according to figures available at the end of December 2017, the TS government is running a Rs 3,998.87 crore revenue deficit.
AP’s 2017-18 Budget was Rs 1,47,870.97 crore and proje-cted a revenue deficit of Rs 415.80 crore at the end of the current financial year. At the end of December 2017, the AP government had a Rs 22,803.65 crore revenue deficit. The AP finance department has estimated that by the end of the current financial year the total revenue deficit will be Rs 14,682.74 crore.
Up to December 2017, the TS government’s total revenue receipts were Rs 59,214.36 crore and its revenue expenditure was Rs 63,213.23 crore. This led to a Rs 3998.87 crore revenue deficit.
In the case of AP, the total revenue receipts by the end of December 2017 were Rs 66,111.57 crore and the revenue expenditure was Rs 88,915.22 crore, which led to revenue deficit of Rs 22,803.65 crore.
To achieve revenue surplus by the end of the current financial year, the TS government has stopped all payments and also release of the fourth quarter funds to some departments in order to save money.
According to the Fiscal Responsibility and Budget Management (FRBM) Act, the ceiling for market borrowings is 3 per cent of gross domestic product (GDP). For the revenue surplus states, the Centre will allow another 0.5 per cent additionally for market borrowings.
If TS shows revenue surplus at the end of the financial year, it will get permission for additional market borrowing.
The 14th Finance Commission has projected that AP will get revenue deficit continuously for five financial years starting from 2014-15. The Commission has recommended that the central government give resource gap fund to AP for five financial years.
To get resource gap funds from the Centre, AP has to show revenue deficit by the end of the financial year. For this reason, the AP government has been very liberal in spending funds.