The Congress Party, which is all set to form the new government in Telangana next week, will have a tightrope walk to bear the financial burden of its `Six Guarantees’ promised in its manifesto.
The success of the party in the polls on November 30, 2023, is also driven by its carefully drafted manifesto which appealed to the farmers, women and youth.
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The party, which sailed the elections with an emotional connection that it was the party that gave the statehood to Telangana, assured that its six guarantees “help realise the dream of Bangaru Telangana”.
These six guarantees are categorised as “Mahalakshmi”, “Rythu Bharosa”, “Gruha Jyothi”, “Indiramma Indlu”, “Yuva Vikasam” and “Cheyutha”. They include offering a stipend of ₹2,500 per month for women, supply of gas cylinders at ₹500, free bus travel to women in RTC busses, among others.
While the applicability of these guarantees and their scale is yet to be seen when the schemes are actually rolled out by the government to be formed, they will surely result in a sizable outgo on the State Exchequer.
A key challenge ahead for the new government will be maintaining fiscal prudence while delivering the promises made.
The State economy has been over-leveraged in the recent years by the Bharat Rashtra Samithi (BRS) Government.
In 2023-24, the fiscal deficit is estimated to be 2.7 per cent of GSDP. For 2023-24, the central government has permitted a fiscal deficit of up to 3.5 per cent of GSDP. As per the revised estimates, in 2022-23, the fiscal deficit of the state is expected to be 3.2 per cent of GSDP, which is lower than the budget estimate of 4.0 per cent of GSDP.
Public debt is also a concern. At the end of 2023-24, the outstanding liabilities are estimated to be 23.8 per cent of GSDP, slightly lower than the revised estimate for 2022-23.
At the end of 2022-23, government guarantees are estimated to be ₹1,29,244 crore (11.3 per cent of GSDP as per revised estimates.
Making the two ends meet in the current financial year itself could be an immediate challenge. The BRS Government also almost fully exhausted the debt access limits, according to CAG data.
The debt mobilisation target for the year 2023-24 is ₹38,234 crore. However, the State Government already mobilised ₹33,378 crore amounting to 87.3 percent of the total target between April - October 2023.
The revenue generation has also been much lower than the target for the year. According to Budget FY24, the revenue generation target was ₹2.16 lakh crore. However, out of this, revenue generated so far is only 46 per cent at ₹99,755 crore.
The State Government had already received about 50 per cent of its share in the Central Taxes for the current fiscal year at ₹14,528 crore year was already received by the state government.
The new Congress government will have to factor in these options for the prudent fiscal policy.