Telangana prunes budget by a fifth, blames economic downturn

HYDERABAD: Telangana chief minister K Chandrasekhar Rao on Monday cut the government’s budgeted spending by a fifth from what he had proposed in a vote on account in February, blaming the economic slowdown that he said had hurt the state’s finances.

The budget for fiscal 2019-20 proposed an expenditure of Rs 1.46 lakh crore, including Rs 1.11 lakh crore of revenue expenditure and Rs 17,275 crore of capital expenditure. In February, Rao had proposed to spend Rs 1.82 lakh crore. The revenue surplus is now projected at Rs 2,044 crore and fiscal deficit at Rs 24,082 crore.

Rao said the economic slowdown had affected various sectors across, hurting the country’s GDP and the state’s share in national tax collections. “The country’s economic situation has a bearing on the state too,” said Rao, adding that the Telangana government “decided to formulate the budget based on the change in the scenario and the ground realities”.

The country’s GDP growth has slowed from 8% in the first quarter of 2018-19 to 5% in the April-June quarter of this year, Rao said, adding: “These statistics prove the continuous economic slowdown in the country. The severe economic slowdown is leading to serious repercussions in the country, which we are witnessing daily.”

He said the financial crisis in the country impacted the state’s economy.

“In the first year of GST implementation (fiscal 2017-18), in the absence of any proper calculations, Telangana got compensation as was done in the case of all other states. After this, there was no necessity for Telangana to take this compensation again,” he said.

“But due to economic slowdown, during April and May months this year, Rs 175 crore and during June and July months, Rs 700 crore was given as GST compensation. The compensation taken during June and July was four times the compensation given in April-May and this alone reflects the steep decline in the financial situation.”

The CM said he regretted the decision to cut spending, but said: “We have to tread carefully and cautiously during such a testing time. We cannot go beyond certain limits.”

He assured legislators that there would not be any cuts in large irrigation projects taken up or in the welfare schemes promised.

The BJP slammed the state government for what it called shifting the blame on to slowdown.

“The budget presented falls short of both factual representation and fiscal vision for the state,” said Telangana BJP chief spokesperson K Krishna Saagar Rao, alleging that the state has experienced an economic slowdown way before the world did, thanks to the “mis-governance” of the chief minister.

“Budget hasn't highlighted the factual situation of this debt-ridden state, where a majority of payments are going towards the payment of high interests on the debts than investment into capital expenditure for wealth creation,” he alleged.