Government

KCR Slashes Telangana Budget by 20%, Points at Economic Crisis

Rao presented a Rs 1,46,492.30 crore budget for the fiscal 2019-20. The February outlay had been pegged at Rs 1,82,017 crore.

In what is being seen as the K. Chandrasekhar Rao government amping pressure on the Centre by underscoring the economic crisis in the country, the Telangana chief minister on Monday presented a budget which slashed spending by 21% from what had been portrayed in his February vote on account.

Rao presented a Rs 1,46,492.30 crore budget for the fiscal 2019-20. The February outlay pegged Rs 1,82,017 as the amount to be spent this fiscal.

On Monday, Rao said the state government had to revise the budgetary estimates due to “economic slowdown and decline in revenues”. In the assembly, the chief minister also said that in addition to the decline in state revenues, the Centre had also reduced allocations, “causing severe loss to the state.”

“I regret that I am presenting the state budget for 2019-20 in the House when both the Centre and state are going through a severe financial crisis. We have to tread carefully and cautiously during such a testing time. We cannot go beyond certain limits,” he was quoted by NDTV has having said.


Of the proposed budgetary expenditure, revenue expenditure has been put at Rs 1,11,055.84 crore and capital expenditure at Rs 17,274.67 crore. The February vote on account had showed a revenue expenditure of Rs 1,31,629 crore and a capital expenditure of Rs 32,815 crore.

The budget estimates pegged the revenue surplus at Rs 2,044.08 crore and fiscal deficit at Rs 24,081.74 crore.

“…economic slowdown has been continuing in the country for the past 18 months. There is a steep fall in the Gross Domestic Product. All major sectors are experiencing downward trend. Revenues have fallen,” Rao said, not ruling out the possibility of making a revised estimate if the situation improves later.

He said that the Telangana finance department were hard pressed into discussing the matter with several experts in order to arrive at a favourable budget.

“Based on the provisional figures published by the Controller General of Accounts (CGA), it was estimated that there would be 22.69% growth in the tax revenue of the Centre during 2019-20, but in the first quarter, only 1.36% percent growth was realised,” he said.

Also read: Telangana Has Women Ministers for the First Time as KCR Expands Cabinet

In Telangana too, a 15% growth rate was anticipated but only 5.46% could be realised, he added, mentioning that growth has slowed down in several sectors.

Rao said the Telangana government has decided to use extra-budgetary funds for the construction of major irrigation projects. He said construction works on Kaleshwaram, Palamur-Ranga Reddy, Sitarama, and other major projects would continue without any interruptions.

Congress, BJP united in criticism

Rao’s budget earned him no fans, uniting the Bharatiya Janata Party and the Congress who both argued that it was a budget which did Telangana no favours.

The New Indian Express quoted Congress Legislative Party leader Mallu Bhatti Vikramarka as describing the budget as one which was far from reality, lacking direction and vision. Congress, curiously, chose to highlight how it was Rao’s government which failed in fiscal prudence.

The paper quoted the BJP Telangana chief, K. Laxman, as describing the budget as one full of lies. Rao’s Telangana Rashtra Samithi party has long been at loggerheads with BJP.

Other states ‘much worse’ off

In the last five financial years, in commercial taxes, Telangana recorded an average of 13.6% growth rate while it was 6.61% in the first four months of this financial year, said Rao in the assembly on Monday.

Also read: With Federal Front’s Failure, Will KCR Recalibrate in Telangana?

Growth has slowed down in other sectors, including stamps and registration and motor vehicle taxes, he said. There was a steep decline in the non-tax revenue too, he said.

“In addition to the decline in the state own revenue, the Centre also had made a reduction in the funds that are to be transferred to the state. For 2019-20 financial year, the Centre has cut 4.19% in the states share in Central taxes. The Centre also reduced allocations in several other items causing severe loss to the state,” he said.

According to him, the situation of several other states is much worse than Telangana’s.

Because of the “leverage,” the state has due to its economic growth and fiscal discipline, it could raise funds from other financial institutions, Rao sought to highlight.

Within the limits of FRBM (Fiscal Responsibility and Budget Management) and following the Centres guidelines, the state was raising funds from financial institutions, he said.

Rao also stressed that the Telangana government wants to give “total clarity” on the funds given by Centre under Centrally Sponsored Schemes. “In the last five years, funds of Rs 2,72,926 crore have been collected by the Centre through various taxes from Telangana state. Like all the states in the country, we have also received funds to the extent of Rs 31,802 crore from the Centre for the implementation of Central schemes in the state,” the chief minister said.

(With PTI inputs)

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