Sitharaman said Telangana had incurred a loss of ₹25,000 crore due to its failure to fix meters to water pump sets used in farms.
Published Nov 21, 2023 | 9:49 PM ⚊ Updated Nov 21, 2023 | 9:49 PM
BRS chief KCR Vs Union Finance Minister Nirmala Sitharaman (Supplied)
Telangana witnessed a war of words between Union Finance Minister Nirmala Sitharaman and Chief Minister K Chandrashekar Rao over the implementation of reforms in the power sector.
Attending a “Meet and Greet” event held as part of the campaign of the BJP candidate N Ramchander Rao in Malkajgiri, a Hyderabad suburb, on Tuesday, 21 November, Sitharaman said the state government was not allowed to borrow an additional ₹25,000 crore as it did not implement power sector reforms.
The Union government had said the state could go in for borrowings only up to 3.5 percent of the Gross State Domestic Product (GSDP) — and if it implemented power sector reforms, it could avail an additional 0.5 percent under the Fiscal Responsibility and Budget Management (FRBM) Act.
In Telangana’s case, this works out to ₹25,000 crore at the rate ₹5,000 crore annually over a period of five years. Since the state did not implement the reforms, the 0.5 percent increase in borrowings was not allowed.
Chief Minister KCR hit back at the Union minister, saying she was speaking “shamelessly”.
Reacting to KCR’s allegation that the Union government curbed ₹25,000 crore in borrowings to Telangana in the past five years because the state government refused to fix meters to agriculture pump sets, Sitharaman explained that for additional borrowings by any state, certain conditions needed to be fulfilled.
“If you don’t fulfill the condition and go for extra borrowing, how can the Centre provide it? Have other states not done it? Should the Centre give an exemption to KCR? KCR was not prepared to fix the meters, but blames Prime Minister Narendra Modi. This drama is going on in the state, which is harmful,” she remarked.
Responding to her, KCR said, “Modi says that he is giving free electricity to farmers. On the other hand, he asks every well and motor to have meters. I have denied their request as we are just getting better now. In retaliation, they have not allowed us to go in for an additional ₹25,000 crore borrowings.”
He was addressing a poll rally in Suryapet,
“But Nirmala Sitharaman is shamelessly speaking in Hyderabad that since Telangana has not installed the meters, we have not allowed additional borrowings,” he said.
The Department of Expenditure, Ministry of Finance, introduced reforms in the power sector by providing financial incentives in the form of additional borrowing permissions to the states.
Borrowing eligibility has been limited to 3.5 percent, with an additional 0.5 percent subject to the introduction of reforms in the power sector.
The initiative was announced in the Union Budget 2021-22. It allowed an additional borrowing of up to 0.5 percent of the GSDP annually for four years from 2021-22 to 2024-25.
As of June 2023, a press release from the Ministry of Finance indicates that 12 states — including those not governed by the ruling National Democratic Alliance (NDA) — such as Kerala, Andhra Pradesh, Tamil Nadu, West Bengal, and Rajasthan — have been actively implementing the power sector reforms.
The press release mentioned that a total amount of ₹66,413 crore has been sanctioned for these states.
While certain states have implemented the reforms, others like Telangana, refrained from implementing it due to concerns and opposition from farmers.
The differing opinions on the reforms have led to a contentious political environment, with various parties expressing their concerns.
