No one envies Telangana Finance Minister T Harish Rao. He has to square the circle when he presents the state Budget on 6 February. He will have to perform a very delicate and near-impossible task of striking a balance between development and welfare.
Why Telangana Budget 2023 has to be optically alluring
As it is an election year, he would have to please all sections and yet ensure that the growth of the economy does not become a casualty and the development works would not be hamstrung. This apart, there is an intimidating list of unkept promises for which he would have to make a provision, like waiver of agriculture loans up to ₹75,000 per farmer.
As the Budget has to be optically alluring, he would have to bloat it to anywhere close to ₹3 lakh crore as it is bad politics if you cut your coat according to your cloth. The size of the Telangana Budget for 2022-23 was ₹2.52 lakh crore.
Under the income tab, figures are likely to go up as the state expects to clock a growth of 15 percent in the next year. Last year, the state’s own resources were estimated at ₹1.26 lakh crore and actual realisations would be known after the completion of the fourth quarter of the present financial year (2022–23).
As there was buoyancy in the economy, the realisation of revenue till the end of the third quarter was ₹90,000 crore which was on expected lines. Now an assessment is being made as to how the fourth quarter would pan out.
Unhelpful Centre
In the hostile atmosphere of an unhelpful Centre, which has been proved by Union Finance Minister Nirmala Sitharaman’s Budget on Wednesday, Harish Rao would have to make do with whatever little resources to fund the gargantuan welfare schemes and yet ensure that the ongoing development does not get derailed.
It is a no-brainer that irrigation is high on the priority list of the chief minister.
Schemes that keep KCR going
The two welfare schemes — Rythu Bandhu and Dalit Bandhu — have been causing a haemorrhage on the state exchequer but they are the only schemes that keep KCR going in the wake of the anti-incumbency load he is carrying.
Harish Rao, therefore, has to cut corners to come up with funds for the scheme as well as for the energy sector in the Telangana Budget since the state continues to provide power to the farm sector 24×7 free of cost.
Harish Rao has already said that the state would not implement power sector reforms regardless of the fact that it would not be able to borrow about ₹6,000 crore as it would not be able to avail 0.5 percent relaxation in the FRBM limit.
Also read: Minimal allocations for Telangana in Union Budget
Telangana Budget 2023, further challenges for Harish Rao
Another burden on Harish Rao is to find resources as the state has been issuing a series of notifications for filling 80,000 government vacancies. This apart, he would have to continue making allocations for committed expenditure, about ₹60,000 crore which includes salaries, pensions, and debt servicing.
The only mantra now with the finance department to ensure liquidity is to focus on augmenting the state’s own revenue, by plugging leakages, reining in tax evasion, and making officials responsible for any shortfall in realisation of revenue.
KCR has spoken to FM about Budget
Chief Minister K Chandrashekar Rao reportedly discussed the priorities and allocations to important sectors in the Telangana Budget with Finance Minister T Harish Rao last Saturday.
He is also understood to have discussed how the state had fared in the last three quarters in the current financial year (2022–23) and reportedly went through the proposals of all the departments for the next financial year.
In the current financial year, the commercial taxes department is expected to generate ₹60,000 crore and the state government wants to raise the target by ₹10,000 crore in the next year.
The state government is planning to streamline the process of filing GST returns, keeping a close watch on tax evasion, and recovery of dues. The officials have a feeling that the state was not realising as much revenue as it should have from Hyderabad, which is a cash cow for the government.
Also, the government is understood to have found that more attention needs to be paid to the interstate transportation of goods to prevent tax evasion. The government is also planning to fix responsibility on officials if they fail to reach targets or show slackness in discharging their duties which helps tax evaders.
