After bifurcation, debts of Telugu States increased

The two Telugu States are in serious debt trap, particularly after the bifurcation in 2014. The two states are running on borrowings rather than making any attempt to increase their revenue sources. The spending extravagance had landed the two States in more debt than the revenue. More shocking is that the Telangana State which had the advantage of Hyderabad in its exchequer and started with revenue surplus is also landed in debt trap.

According to the Financial Accounts of the combined State, the Andhra Pradesh started with a debt burden of Rs 1,30,654.35 crore, while the Telangana started with Rs 69,515.28 crore as on June 2, 2014, the appointed day. However, in the 2015-16 financial accounts the debt of the two states was seen at Rs 1,73,852.60 crore for AP and Rs 97,992.29 crore for TS. Again in the revised estimates of the 2016-17 budget showed the debt burden at Rs 1,92,983.97 crore for AP and Rs 1,14,813.82 crore for TS which went up to Rs 2,16,026.58 crore for AP and Rs 1,40,523.17 crore for TS in the 2017-18 budget estimates.

This information was given by Union Minister of State for Finance Pon Radhakrishnan to Congress MP K V P Ramachandra Rao on Tuesday in Rajya Sabha. While admitting that the net borrowings of the two States as fixed under the Fiscal Responsibility and Budget Management (FRMB) guided by the Fourteenth Finance Commission, the Union Finance Minister revealed that the two states are more into external borrowings.

It was a couple of months ago, AP Finance Minister Yanamala Ramakrishnudu had tabled a financial statement on the floor of the Assembly in its monsoon-winter session, where he expressed concern over the increasing dependency of the State on borrowings. He also admitted that the State could not create internal resources for funds mobilisation or have any additional income generating resources in the last four years of bifurcation, while the borrowings have gone up alarmingly. The State is now running on borrowing that exceeds the revenue, which, he said, is not a sign of healthy economy.

While not much is known on Telangana government’s spending of its borrowings, the AP is spending more on the foreign tours and activities aimed at mobilising investments during the last four years. The State finance ministry has no data about the volume of investments that have come in extent of the volume of money spent, but the growing rate of debt is a serious cause of concern for the State. It is high time that the AP government settles down to reality from day-dreaming and focus on creating internal revenue assets generation measures rather than banking on borrowings to run the affairs of the State.

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