Hyderabad: The state government is most likely to ask all departments to cut their expenditure by 30 to 50 per cent in the remaining four months of this fiscal, till March 31, in the wake of a huge shortfall in fund mobilisation.
The financial crisis is expected to hit the implementation of welfare schemes as the election year dawns.
The government is facing a Rs 40,000-crore shortfall after the Centre placed restrictions on borrowing. Finance department officials estimated that this could rise to Rs 70,000 crore.
Official sources said the finance department had started reworking allocations to the departments in the wake of Chief Minister K. Chandrashekar Rao’s decision to hold a special session of the Assembly next month to apprise people about the losses that the state government has suffered due to the Centre’s restrictions on FRBM limits, market borrowing and off-budget loans.
Telangana is expected to get only Rs 10,000 crore in the form of Central grants against Budget estimates of Rs 40,000 crore.
The Centre had refused permission for market borrowing worth `15,000 crore, bringing it down from `54,000 crore to `39,000 crore. The Centre did not allow additional 0.5 per cent FRBM limit for Telangana which it was entitled to for being a revenue-surplus state.
The Centre linked the benefit with power sector reforms, which resulted in a loss of Rs 6,000 crore to the state. The state government refused to implement these reforms terming them ‘anti-farmer’.
The Centre imposed restrictions on off-budget borrowings amounting to Rs 20,000 crore. All these resulted in overall shortfall of nearly Rs 40,000 crore to state government.
Official sources, however, did not rule out the possibility of the CM going for downsizing Budget again — he had pruned the Budget size by 20 per cent in 2019-20 citing economic slowdown and drastic cuts in Central funds and grants.
As of now the government is depending on its own tax revenues, non-tax revenues and sale of lands to fill the gap between income and expenditure. However, the government could only sell land worth Rs 9,000 against the target of Rs 25,000 crore. The government is expected to speed up land sales in the remaining four months of this fiscal.
The immediate priority of the government is to mobilise `7,500 crore for Rythu Bandhu for the rabi season. It needs Rs 5,900 crore for Dalit Bandhu to cover 500 beneficiaries in each of the 118 constituencies. Going by the trouble the government is facing, it is likely that the second and third phases of Dalit Bandhu may not be implemented in the rest of this fiscal.
The government is also weeding out Aasara pensions to cut down on expenditure. It has reportedly cut 5 lakh Aasara pensions recently after verification across the state.