Hyderabad: Finance minister T. Harish Rao told the Assembly that the state zovernment will not yield to the conditions of the Centre for enhancing the FRMB limits by the state government to borrow loans.
He attended the Session after he was declared Covid negative. He was replying to the debate on the Bill amending the Telangana Fiscal Responsibility and Budget Management (FRBM) Act.
Explaining about the reasons for amending the FRBM Act, he said the Centre had allowed additional borrowing of ₹ 1,435 crore during the previous fiscal following the shortfall in the devolution of share of Central taxes as a one-time special dispensation.
He said in view of an unprecedented adverse impact of COVID-19 on State revenues and need to raise additional resources to meet the unforeseen expenditure to contain the Centre had allowed additional borrowing up to 2 % of the GSDP over the above the normal limit of 3% subject to carrying amendments to the State FRBM Act.
He said that amendments to the Act also meant to enhance the quantum of guarantees it could provide to State owned corporations from 90% to 200%.
He made it clear that “the state government however is not willing to accept the conditionalities imposed by the Centre even if it has impact on its borrowings.”
The finance minister refuted the concern expressed by the Congress Legislature Party leader Mallu Bhatti Vikramarka at the net borrowings of the state government charged him with trying to mislead people with his calculations.
The CLP leader said the State’s debt burden had risen to Rs 2.38 lakh crore in the past six years and it was spending ₹ 23,841 crore on debt servicing every year.
He pointed out that the passage of the Bill would result in a steep escalation of debt burden and it would be difficult to manage such large debts in the coming days.
He said “debt servicing burden which is ₹ 23,841 crore at present is likely to go beyond ₹ 50,000 crore going by the indiscriminate borrowings by the government.”
Countering the CLP leader, the finance minister said the net borrowing of the state at Rs, 1,54,557 crores after the repayment of Rs 34,296 crore last financial year.
Maintaining that the Telangana was ranked 28th in the country in terms of debt-GDP ratio indicating the fiscal health of the State, he said that the Telangana was well within the limits in managing its finances in spite of the setback suffered due to the outbreak of novel coronavirus since the past few months.
Harish Rao said Telangana could register double digit economic growth, even while the country’s economic growth slipped to negative, as it has put in place prudent fiscal policies that are focused more on capital expenditure.
After the debate the House passed the Bill, the Congress members including Vikramarka D. Sridhar Babu, Komatireddy Rajgopal Reddy and D Anasuya staged a walk out in protest. Earlier in the day, Assembly Speaker Pocharam Srinivas Reddy congratulated Harish Rao on his recovery from Covid-19 and showing up for work at the Monsoon session of the Legislature.