Telangana Budget 2020-21–Welfare overshadows development

Gali Nagaraja

Hyderabad: The spending on freebies has turned out to be the Achilles heel for the government of Telangana.

The state Budget 2020-21 presented by Finance Minister T. Harish Rao in the Assembly on Sunday provides a grim pointer for the poor state of economy. The ruling Telangana Rashtra Samithi (TRS) heavily tilted towards welfare agenda after it began to head the country’s youngest state. In line with its commitment, the new budget has laid a heavy emphasis on welfare schemes.

For examples, Rytubandhu, a flagship programme of the government which aims to ameliorate the condition of the distressed farming community, took away a lion’s share of allocations with Rs 14,000 crore, up by Rs 2,000 crore over the previous year. Similarly, Aasara pension scheme has got Rs 11,758cr, up by Rs 2,000cr as against the previous year’s allocations.

It appears to be a daunting task for the Finance Minister to strike a balance between welfare and development. The state economy is getting fragile with a mismatch between the receipts and expenditure.  

Dwindling revenues coupled with mounting debts is a matter of serious concern. The budget failed to make a mention of implementation of the Pay Revision Commission (PRC) for 6.5 lakh government employees and pensioners, due since July 2018. But it is a commitment to be fulfilled by the TRS government. If the government concedes the demand of employees unions to implement 63percent fitment as a part of PRC it will entail an additional burden of Rs 18000cr on the state exchequer. As neighbouring Andhra Pradesh government has already announced 27 percent interim relief (IR) for its employees, the fellow-Telangana employees are eagerly waiting for a similar gesture from the KCR government for a long time. The government spends 62 percent of its revenues towards salaries and pensions together, estimated at Rs 92,000cr, annually. PRC and relaxation of retirement age up to 61 years for employees are part of the election promises made by the TRS.

The revenue expenditure projected at Rs 1.09 lakh crore in the state budget for 2020-21 goes towards pensions, salaries and wages, subsidies and interest payments. Rytu bandhu scheme is designed to benefit 58 lakh farmers. S. Malla Reddy of Telangana Rytu Sangham said 18 lakh farmers were awaiting assistance under Rytu Bandh. The first instalment was delivered before 2018 elections. Pensioners are also complaining that the solarium is failing to reach them on a regular basis. It all speaks of the fact that all is not well with the state economy. Outstanding public debt has been projected at 2.29 lakh crore as against 1.99 lakh crore last year. K. Nageswar, analyst, said heavy tilt towards welfare schemes may result in a cut in development expenditure by 30-35 percent in the current fiscal year.   

The budget with an outlay of Rs 1.83 lakh crore, which is up by Rs 40,762crore over the previous year’s revised budget, sounds ambitious, given the past experience. The TRS government presented a vote-on-account budget in February last year for 2019-20 with an outlay of Rs 1.82 lakh crore. Later, it was downsized to 1.46crore in September. Chief Minister Chandrasekhar Rao from the floor of the House blamed the economic slowdown across the country under NDA 0.2 regime for pruning the budget.

The state tax revenues drastically fell as an offshoot of the slowdown which also impacted the flow of central taxes as a share of the state. The state has received Rs 83,284cr during 2019-20 under the head of taxes and duties over the revised estimates which stood at Rs 87315cr. In the ensuing financial year the estimates under this head have been projected at Rs 1.02 lakh crore.