Telangana hopes for economic upturn to fund welfare schemes

HYDERABAD: The Telangana government, which is committed to continuing its welfare and development programmes, is clueless as to how to muster the necessary resources with the economy being in a run-down state. The government is uncertain as to when the economy will take an upturn since the lockdown is likely to continue for some more time.

Also, the question of how the recovery will happen is uppermost in the minds of policymakers. They do not know if it is going to be a V or U or L-shaped recovery. The State has to bear a monthly expenditure of about Rs 800 crore towards Asara pensions. Under this scheme, 40 lakh beneficiaries are to be paid Rs 2,016 each. Besides, the government has to pay about Rs 4,000 crore towards Rythu Bandhu before the commencement of the Kharif season in June but the State’s Own Tax Revenue (SOTR)  is about Rs 980 crore which is less than 10 per cent of its regular monthly income.

The latter ranges between Rs 10,000- 12,000 crore. In addition to this, the State government has to pay huge amounts to bankers towards the crop loan waiver. In order to fulfil its commitments, the government has to perform nothing short of a trapeze act. Another factor worrying officials is that the Central government has been cold to the State’s demands like increasing the limit of FRBM to six per cent which would help the government go in for more borrowings. There has been no word on quantitative easing either.Against this backdrop, the key question is how can the State government put its economy back on rails?
Finance Minister T Harish Rao, speaking to Express on Monday, said: “Experts say there will be a recovery, but as to which form, no one is sure. It could be V or U or L shape.” He, however, emphasised that all welfare schemes would be implemented without any break.

The State’s policymakers, however, are expecting that the economy would spring back to life only if a vaccine is developed for the Coronavirus. Till then, the State government has to depend on borrowings alone. The State raised Rs 4,000 crore loan in the first month of the 2020-21 fiscal. In 2019-20 fiscal, the State raised Rs 26,659.92 crore loan till February against the Budget estimates of Rs 24,081.75 crore, 110.71 per cent of the target in 11 months.