Hyderabad: State governments across the country have requested Union finance minister Nirmala Sitharaman to permit an increase in the GSDP ratio in the revenue deficit from 3.3 per cent to 4 per cent in Budget 2020-21.
The revenue deficit has been pegged at 3.3 per cent of the GSDP (Gross State Domestic Product) by the Fiscal Responsibility and Budget Management Act, 2003 (FRMB) to ensure that state government budgets do not go overboard.
The state governments want percentage of GSDP to be increased so as to be able to borrow more as they are facing a financial crunch and need money to pay salaries and for welfare schemes.
The Telangana state government has projected Rs 29,077 crore of borrowings in its budget for 2019-20 which is within the limits of 3.3 per cent of the GSDP in the revenue deficit.
According the Comptroller and Audit General’s (CAG) Report of 2014, the debt burden of Telangana state was Rs 61,711 and it has now reached Rs 2,03,730 crore. Ithe Centre allows increase of 4 per cent then the state government will able to take borrow another Rs 40,000 crore.
In view of the decrease in the revenue resources in the state due to the economic slowdown, the state governments say that borrowings are the only solution to generate funds for infrastructure and irrigation projects and also for welfare programmes.
