Telangana’s total liabilities nearing ₹4 lakh crore.

Telangana’s growing debt burden is a matter of concern, as its total liabilities are inching closer to ₹4 lakh crore. According to the Comptroller and Auditor General of India’s audited figures for the fiscal year 2021-22, the state’s total liabilities amounted to ₹3.21 lakh crore, which represents a significant 28% of the Gross State Domestic Product (GSDP). This substantial debt includes ₹6,949 crore received as back-to-back loans from the Central Government to compensate for the GST revenue shortfall.

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However, in the fiscal year 2022-23, the state faced constraints in raising funds. The Union Finance Ministry restricted Telangana’s borrowing capacity, citing previous years’ borrowing levels as excessive. The Ministry set a gross borrowing ceiling of ₹42,225 crore for the state, of which Telangana opted for negotiated loans amounting to ₹1,500 crore and borrowing from the public account of ₹4,107 crore. This left room for the state to raise ₹36,613 crore from the open market.

During the current fiscal year, Telangana had already raised ₹26,500 crore through open market borrowings via auctions conducted by the Reserve Bank of India in the first half of the year. This limited the state’s ability to raise additional funds, with approximately ₹10,000 crore left to be raised in the remaining seven months. These borrowings were primarily driven by the implementation of various welfare schemes such as Rythu Bandhu, Dalit Bandhu, and financial assistance of ₹1 lakh to sections like BC artisans and Muslims. Additionally, the state committed to completing a crop loan waiver of up to ₹1 lakh for eligible farmers, which would incur an additional expenditure of approximately ₹19,000 crore.

On the revenue front, Telangana faced challenges, achieving only ₹42,712 crore in tax revenue by the end of July, representing just 28% of the targeted ₹1.52 lakh crore for the current fiscal year. Given the revenue shortfall and borrowing restrictions imposed by the Central Government, the state resorted to measures like land auctions and advance issuance of licenses for liquor outlets to generate some additional revenue, thereby alleviating the financial burden caused by schemes like the crop loan waiver.

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