The Telangana Budget

Telangana finance minister Etela Rajender presented the maiden budget of the new state in the assembly with an outlay of Rs.1,00,638 crore. Of this, Rs.51,989 crore is for nonplan expenditure and Rs.48,648 crore for plan expenditure. Sticking to the convention followed by the previous regimes, Rajender opted not to propose any additional taxes in his budget that is for ten months beginning June 2014.While the full budget was presented on Wednesday , the state was utilizing finances as per a vote-on-account budget passed earlier. So far, the finance minister said that about Rs.20,000 has been spent in the first six months since the state came into being and that the rest of the proposed expenditure, to the tune of a little more than Rs.80,000 crore, are expected to be spent in the next four months.
Given the daunting size of the budget and a moderate 4.42 per cent growth of tax mobilization, the finance minister said in his budget speech: “These estimates are contingent on the state government realizing ambitious additional revenue mobilization targets and receipt of the budgeted grants from the Government of India.“
As he showed an estimated revenue surplus of Rs.301.02 crore, the finance minister sought to project the more important fiscal deficit at Rs.17,398.72 crore, which is 4.79 per cent of the GSDP (gross state domestic product). This is more than 1.79 per cent limit allowed under the provision of the FRBM Act (Fiscal Responsibility and Budget Management Act). While the burgeoning fiscal deficit reflects heavily on the debt burden faced by the state, the FM justified his move saying Telangana deserved an additional leeway in terms of the deficit as it was a new state. “The fiscal deficit must be within three per cent as per the FRBM Act. However, we deserve an extra margin as we are a fledgling state,“ he said replying to queries from reporters in the post-budget press conference.
As there is an yawning gap of Rs 52,018 crore between the total estimated expenditure and revenue which includes tax revenue (Rs 35,378 crore) and nontax revenue (Rs 13,242 crore), the budget figures show the state would have to borrow in all Rs 17,774.30 crore, which is an increase of 44 per cent over the vote-on-account taken earlier this year. Rajender, however, said he could not quantify the present debt burden since the assets and liabilities were yet to be distributed among the successor states.
Terming social welfare as the top priority , he set aside Rs.12,139 crore under the subplan meant for SCs and STs. He said his government was committed to spend Rs.50,000 crore for SC welfare for the five-year period of 2014-19. However, for this year, an amount of Rs.1,000 crore has been earmarked for the ambitious scheme of distributing three acres of farm land to landless dalit households.The housing department was allocated Rs.1,000 crore that includes the expenditure earmarked for providing a two-room house for the poor.
The finance minister said the figures were likely to go up.“The figures would be changing according to the emerging needs,“ he said.Rajender said Rs. 4,250 crore has already been released towards the first instalment of the farm loan waiver scheme. In all, the state is committed to waiving farm loans totalling Rs.17,000 crore.
The government has proposed to revive 45,000 tanks of which work on 9,000 tanks is proposed to be taken up in the current financial year with an allocation of Rs.2,000 crore. The ambitious Rs.25,000 crore-watergrid plan has been allocated Rs.2,000 crore this financial year.
He said government had taken several measures to resolve the power crisis, including signing a MoU with Chhattisgarh and was planning to add 20,000 MW of power generation capacity in the next five years. The energy sector has been provided with Rs.3,241.9 crore under nonplan head which includes Rs.3,000 crore for power subsidy .