Virus squeeze on Telangana revenue, govt to raise Rs 1,000 crore in bonds

HYDERABAD: The Covid-19 health emergency has also triggered a financial crisis in Telangana. And it could not have come at a worse time for India’s youngest state, already in the middle of a lockdown and economic slowdown. Grappling with dwindling revenues, the state has now decided to raise Rs 1,000 crore through bonds.
Though raising of bonds is a regular process depending on fund requirement, the timing assumes significance as the government finds itself in a sticky situation on payment of salaries to staff.Sources said the amount thus raised would come in handy given the current situation where the entire focus is on combating Covid-19. The state had on Tuesday also received Rs 269 crore towards its share of GST compensation from the Centre.
Sources said the auction by the RBI closes on April 13 and that is why the state has shown the urgency to raise the bonds. “We are confident of getting Rs 1,000 crore which will be put to good use. Telangana has a rating of ‘A’ and our bonds have been received well in the securities market,” a top finance department official said. Telangana can raise Rs 15,031 crore in the first nine months of 2020-21, sources said.
In the normal course, Telangana has always used the money from bonds on infrastructure and important projects. “In this crunch time, we need to see how we will put the money to use,” a senior official said.
Hope for govt in securities mkt: Official
Sources said the state did not utilise its complete quota in the last year’s auctions. “But, this year, the situation is different and the Covid-19 pandemic has made matters worse,” an official said.
Even when the state had gone for a bigger borrowing (₹700 crore) a few years ago — during economic slowdown — Telangana succeeded in selling the bonds. “Having a very good state’s own tax revenue (SOTR) gives great hope for government in raising the money in the securities market,” an official said.
Dropping enough hints on the severity of the revenue shortfall, CM K Chandrasekhar Rao had said the revenue department had been dealing with a loss of ₹12,000 crore due to the lockdown.
Towards this end, he has effected a pay cut. While IAS, IPS, IFS and other officers would forgo 60% cut in their salaries, all other employees would face 50% cut. The salaries of chief minister, his cabinet colleagues, MLAs and MLCs would be cut by 75%.