The YSRCP in Andhra presented an interim Budget. Kerala’s was a full Budget, while TN and Karnataka are also likely to be full Budgets.
Telangana CM Revanth Reddy. (Supplied)
The new Revanth Reddy government in Telangana has raised eyebrows with indications that it may present an interim Budget instead of the full Budget for 2024-25 on Saturday, 10 February.
Already caught in a debt vortex and the additional burden of the six election guarantees, an interim Budget cannot clearly show where the rupee comes from and goes.
The speculation is that the Congress government was disappointed with none of the items in its wish list from the Union government figuring in the interim Budget that Finance Minister Nirmala Sitharaman presented on 1 February. The state might be delaying its Budget hoping that the Union government would be considerate when its full Budget comes in July.
The government has issued no clarification so far. And there is no historical reason for delaying the full Budget because the Assembly elections are just over, and a new government is in.
This is the second time that India’s youngest state may have an interim Budget. In 2019, before the general elections, the then-BRS government went in for a vote-on-account for 2019-20, wanting first to know how the Union budgetary outlays would impact its finances.
Among other states, Rajasthan, too, presented an interim Budget on Friday, 8 February. The BJP government expects to announce some special schemes in tandem with the BJP at the Centre for the coming Lok Sabha elections.
In the South, the YSRCP government in Andhra Pradesh presented an interim Budget. It makes sense because Assembly elections are due shortly. Kerala’s was a full Budget four days ago. Tamil Nadu and Karnataka are coming up with full Budgets in the coming days.
Telangana’s distressed financial situation could be the logical reason for the government eagerly awaiting largesse from the Union government regarding increased outlays or financing schemes and projects.
Revanth Reddy and his deputy, Mallu Bhatti Vikramarka, visited Delhi last month to meet Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman.
Among the projects on their wish list were the Hyderabad-Vijayawada and Hyderabad-Nagpur industrial corridors, the second phase of the Hyderabad Metro Rail project, and payment of central arrears of the grant of ₹1,800 crore grant to develop backward regions.
The Union budget did not touch upon these issues, perhaps raising the state government’s hope to wait for the full budget after the Lok Sabha elections.
The fact that the Telangana Congress did not join the Karnataka Congress in the latter’s protest in Delhi against the alleged fiscal injustice of the Union government is also being seen as part of the Telangana’s meaningful silence.
In any case, the state’s finances are no one’s envy. It is sitting on a pile of debt. A government white paper on 20 December pegged the cumulative debt at a whopping ₹6,71,757 crore. It includes off-market borrowings. At the end of the 2023-24 financial year, the debt burden would be ₹3,89,673 crore, excluding off-market borrowings.
It reflects poor fiscal management, considering the new state began with an outstanding debt of just ₹72,658 crore in 2014-15, which increased at an annual average rate of 24.5 percent between 2014-15 and 2022-23, reaching ₹3,52,061 crore by 2022-23 (revised estimates).
In 2024-25, debt servicing apart, the Congress has to find money for its guarantees. Two of them — free bus rides for women — are haemorrhaging the state transport corporation. It has to find resources for two of the six guarantees this year — supply of LPG cylinders at ₹500 each and free power supply to households with a 200-unit cap.
Estimates for the total cost of the guarantees are mind-boggling. Some have it in the range of ₹50,000-60,000 crore. Some go as high as ₹1.5 lakh crore. When the government determines the criteria to identify the beneficiaries, a realistic figure will be arrived at.
Looking for plausible explanations for the interim Budget, Bengaluru-based banker and economist S Narendra told South First, “The governments want to play safe and not commit huge outlays or allocations, especially to social welfare programmes, health, infrastructure so that they can get or have absolute clarity on the allocation of centrally-sponsored programmes or other allocations to these states in the Central budget in July.”
The fear of the Union government’s step-motherly treatment could also be a reason, he said. “Otherwise, if such allocations are done upfront by the States in their full-fledged budgets though they have come to power recently and enjoy full term, the fear is that in the central budget, the allocations may be low, step-motherly treatment may be shown (by whichever party may come to power) and once allocated in the State budgets, they cannot withdraw later after the central budget announcements/allocations.”
Narendra believed that the state government may have needed some manoeuvring room to juggle its finances depending on what the Union budget finally allots for the state. “There will be freedom, elbow space, fine-tuning which can be done if they wait till July to clearly know the quantum of allocations to centrally sponsored programmes or schemes, which will be around 40-45 percent of the budget size.”
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