The new Congress Government led by Chief Minister A Revanth Reddy in Telangana has launched a scathing attack on the erstwhile Bharat Rashtra Samithi (BRS) Government for landing the State in a deep financial crisis.

Deputy Chief Minister and Finance Minister Mallu Bhatti Vikramarka has alleged that the debt burden of the State has gone up by almost 10 times to ₹6.71 lakh crore now as against ₹72,658 crore in 2014-15, when the State was carved out from Andhra Pradesh.

Source: The Whitepaper on Telangana Finances

Source: The Whitepaper on Telangana Finances

Alleging that the 10-year of KCR Government caused financial distress to the State, he said that the debt:GSDP ratio has gone up by more than 12 percentage points to 27.8 per cent in 2023-24 as against 15.70 per cent in 2015-16. 

“As a result of the mounting debts, the share of debt servicing has gone up enormously to 34 per cent, leaving a little headroom for capital expenditure,” he said.

Releasing a white paper on the State’s finances in the Assembly on Wednesday, he termed it unfortunate that the State was reeling under serious debt burden.

Debt service burden

The debt service burden shot up to ₹32,939 crore in 2023-24 from ₹6,954 crores in 2014-15, growing at an annual average rate of 22 per cent.

“When the state was formed, there was a feeling of euphoria that the aspirations of four crore people of Telangana have become a reality. One of the key themes of the Telangana movement was state finances apart from water and employment. It was anticipated that the state would be governed in a fiscally prudent and responsible manner,” he said.

“It was expected that there would be a renewed focus on the economic development of the State while taking care of the needs of the poor and underprivileged. In spite of all the uncertainty and pendency of the division of assets of the state and the corporations, Telangana started on a firm footing on the fiscal front,” he said.

Off-budget borrowings

Stating that the State reported revenue surplus in the first five years and fiscal responsibility norms were also broadly adhered to, he said that the situation of the State started changing quite drastically once the off-budget borrowings started being mobilised in the name of mega projects such as Kaaleshwaram, Palamuru Rangareddy, Sitarama, and Mission Bhagiratha,” he said.

“Large scale mobilisation of the off-budget borrowings and lack of revenues to the SPVs (which were created to mobilise resources for the capital-intensive irrigation projects) meant that effectively the government guaranteed loans were being serviced by the government itself from the budgetary resources. This meant a rapid increase in the debt servicing by the state,” he said.

Expenditure on the employees and pensioners of all categories in terms of their salary and pension is presented. Due to the huge mismatch between resource availability and expenditure commitments, the state had to increasingly rely on the Ways and Means facility provided by the RBI, he alleged.

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