Pandemic-hit Telangana tread cautiously in Budget preparation

V Rishi Kumar Hyderabad | Updated on February 07, 2021

Telangana Chief Minister K Chandrasekhar Rao

State Government incurs a considerable revenue loss of ₹52,000 crore during Covid-induced lockdown

The Telangana Government is treading cautiously on the preparation for 2021-2022 State Budget, given the huge ₹52,000 crore revenue hit it had to contend with due to Covid induced lockdown and general economic slowdown in 2020.

The State’s own tax and non tax revenues were down nearly 50 per cent at about ₹34,000 crore as against projected ₹67,000 crore during the first half of the current fiscal. This has now gone up past the ₹52,000-mark.

Most of the budgetary projections and targets are far away from the estimated numbers due to slowdown even as State Finance Minister T Harish Rao seeks to ensure adequate fund flow for various welfare schemes of the State.

The State had announced a budget of ₹1,80,000 crore for 2020-21, and given the current financial situation and economy coming out of the lockdown phase, the Finance Minister will be hard-pressed to retain the budget size for 2021-2022. The Government officials have suggested that the State consider a more realistic and pragmatic budget given the tight financial situation, which is just about coming out and getting back to normalcy.

Budget preparation

The Government has initiated a budget preparation process and has been holding discussions on various sectoral allocations. Added to the current concerns, it has also contributed to the enhanced funds required for the Pay Revision Commission recommendations.

Telangana Chief Minister K Chandrasekhar Rao, who handled the Finance portfolio had presented a ₹1,82,017 crore budget for 2019-2020. Later Finance Minister T. Harish Rao followed it up with a ₹1.82-lakh crore budget for 2020-21. At best, the state may try and retain the budget of the same size next fiscal. Officials have advised the Government to consider slashing it by about 15-20 per cent.

During the Republic Day, Governor Tamilisai Soundararajan had mentioned how due to disruption of activities during the Covid pandemic lockdown the State Government had incurred a considerable revenue loss of ₹52,000 crore. Despite the steep fall in revenue, the State continues with its welfare and social schemes.

The revenue from liquor sales and taxes from stamp registration, entertainment tax, and other commercial taxes has been hit, leading to step fall in revenue collections. But, gradually situation is getting better with the phased opening up of various sectors.

The Gross State Domestic Product of the State, which was growing in the double digits over the past few years, has taken a big hit and the salaries of employees were also cut during the lockdown phase. This has been gradually restored with the economy showing signs of recovery.

Published on February 07, 2021

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