HYDERABAD: The finance department is learnt to have sent an SOS to the state government to bring to its urgent notice the precarious financial condition being faced because of the Centre stopping loans to Telangana since April.
According to official sources, the finance department has alerted the Chief Secretary’s Office and the Chief Minister’s Office on the urgent need for mobilising Rs 14,000 crore in the first week of June to meet emergency financial needs including payment of salaries and pensions for employees for the month of May and servicing of existing debt towards repayment of principal amount and interest in June.
Chief Minister K. Chandrashekar Rao is reportedly mulling to convene a special Cabinet meeting very soon to take stock of the prevailing financial crisis and devise future course of action to be initiated against the Centre, if it denies permission to the state government to raise loans even in June.
He is reportedly seriously considering a proposal to move Supreme Court against the Centre if it denies permission to raise loans by June 4 on the ground that the Centre has been allowing states that are ‘revenue deficit’ and that have higher debt to GSDP ratio to raise loans while denying the same to Telangana which is a ‘revenue surplus state’ and has a lower debt to GSDP ratio in the country.
Since only a day left for May to end, the finance department is clueless on how to arrange funds for salaries, pensions, debt servicing, and to meet expenditure for flagship welfare schemes such as Rythu Bandhu and Aasara pensions. Since the kharif agriculture season starts from June 1, the state government needs to credit nearly Rs 7,500 crore in the bank accounts of nearly 62 lakh farmers toward Rythu Bandhu.
The finance department hopes to mobilise Rs 6,000 crore through own tax and non-tax revenues but still has to face a deficit of Rs 9,000 crore, if the Centre denies permission to raise loans by auctioning bonds even in June.
The finance department is already reeling under a deficit of Rs 11,000 crore with the Centre halting auction of bonds worth Rs 3,000 crore in April and Rs 8,000 crore in May.
The state government has sought permission to raise Rs 15,000 crore in the first quarter of the new fiscal 2022-23 (April-June) by auctioning bonds but the Centre denied the approval, raising queries on the huge off-budget borrowings amounting to Rs 1.45 lakh crore made by state government by giving bank guarantees on behalf of various corporations. The Centre is insisting on treating these bank guarantees as part of overall state government’s debts, which the Telangana government is strongly opposing.
The finance department has pinned its hopes on the Centre giving permission to raise the remaining Rs 4,000 crore loans through auction of bonds due for June.
