Eatala presents revenue surplus budget of Rs.1.15 lakh crore

S.Nagesh Kumar

HYDERABAD:  Chief Minister K. Chandrasekhar Rao’s assertion that Telangana is a rich State was driven home by his Government when it presented a Rs. 531 crore revenue surplus budget in the Assembly on Wednesday.

Gujarat is the only other revenue surplus State, said Finance Minister Eatala Rajender while presenting the 2015-16 budget for Rs. 1.15 lakh crore. In his hour-long speech, the Minister repeatedly blamed the Centre for not giving the funds it had promised to Telangana and castigated the Andhra leadership for diverting revenues earned in Telangana

He said that in spite of having adequate revenue potential, Telangana suffered because of diversion of its resources. This, along with the categorization of Andhra Pradesh as a deficit State, had established the fact that the higher share of expenditure incurred in the Andhra region was financed by the revenues collected in Telangana. “Unfortunately, past injustice cannot be rolled back”, he said.

The Minister said the fiscal deficit would be a huge Rs.16,969 crore which works out to 3.49 per cent of the Gross State Domestic Product (GSDP). He took a potshot at the Centre saying that while it had budgeted for a fiscal deficit of 3.9 per cent of GDP in 2015-16, it was asking States to adhere to the limit of 3 per cent of GSDP.

Mr. Rajender’s criticism did not, however, hide the Government’s shabby housekeeping exposed by the huge fiscal deficit — the difference between the Government’s expenditure and its revenue.  He attributed this to the increased pay and allowances of 3.5 lakh Government employees. The Government had given them a 43 per cent pay hike against 28 per cent demanded by them leaving the exchequer poorer by Rs. 6,500 crore.

Size of budget quite ambitious

The total budget size, which represents an increase of 15 per cent over the current year’s outlay, sounds ambitious given factors like shortfall in receipts from the Centre and the latter’s reluctance to permit Telangana to raise Rs. 4,000 crore by relaxing the borrowing limits under the Fiscal Responsibility and Budget Management (FRBM) Act. The Minister said the resource shortfall in Central funds under various categories this was a massive Rs. 20,227 crore.

On the other hand, he claimed, the collection of State’s own tax and non-tax revenue was more or less on track compared to the budget estimates though VAT collections remained subdued because of general stagnation in economic growth. He said the State’s own revenue for 2015-16 was estimated at Rs. 46,494 crores, an increase of Rs. 11,116 crore over the current year’s estimates.

This is a tall claim because Ministers dealing with revenue-related subjects like Commercial Taxes, Excise and Transport have been regularly complaining about leakages and tax evasion while the Government’s own policies such as MV tax exemption have led to drop in revenue. Moreover, the land regularization scheme which was aimed at raising revenue failed to meet its objective as there was poor response from those holding bigger plots.

Minister presents macroeonomic scenario

Explaining the broader picture, Mr. Rajender said that from a double-digit average annual growth of 12.87 per cent during 2004-09, growth had slipped to 4.1 per cent in 2012-13 but it was expected to recover to 5.3 per cent in 2014-15. A redeeming feature was the expectation of recovery in service (from 5.9 to 9.7 per cent) and industry sectors which were major contributors to the GSDP.

He said that the Government’s first and foremost priority was the welfare of the weaker sections, followed by the development of agriculture and allied sectors and, lastly the growth of the industrial sector. These were the three tenets of the TRS Government’s policy, he said and went on to explain what it had done in the last nine months and what it intended to do in the coming year.

In tune with KCR’s declaration that Telangana would not purchase power from AP, Mr. Rajender outlined measures such as the agreement signed with the Chhattisgarh government for supply of 1,000 MW and increasing the existing generating capacity from 4,320 MW to 23,675 MW to make Telangana surplus by the end of 2018. He said future generations would enjoy uninterrupted power supply. They would not know what a power cut is !

About the TRS Government’s flagship programmes, the Finance Minister said an amount of Rs. 2,083 crore had been provided for Mission Kakatiya which seeks to restore irrigation tanks to their old glory. As many as 9,308 tanks were proposed to be taken up for restoration in 2015-16.  Similarly, the budget had earmarked Rs. 4,000 crore for Water Grid, a programme aimed at supplying piped water to every household in the next four years.

There was no mention in the budget speech about KCR’s promise of building double-bedroom houses free of cost for the poor. However, the plan documents showed that an amount of Rs. 391.67 crore has been allocated for the programme, a grossly inadequate amount considering the rising cost of construction.

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