Centre junks TS plea to allow borrowings

Hyderabad: The Union government has turned down Telangana government's plea to revoke restrictions on seeking borrowings from the financial institutions.

The efforts put by the official team led by state Finance Secretary K Ramakrishna Rao to convince the Union government on borrowings did not draw positive response. Chief Minister K Chandrashekar Rao now proposes to hold a high-level meeting with economic experts on the measures the state government needs to take.

Sources said the TS government will wait till Friday, the day when the RBI usually grant permission to the states to go in for borrowings. If the Reserve Bank does not give its nod, the TS government will take some crucial decisions to launch a fight against the Centre, sources said.

The State Finance department has been requesting the RBI to permit borrowing of Rs 3000 crore since the beginning of the new financial year, but the apex bank did not agree.

Officials said that the official team of the state Finance wing submitted reports on the borrowing taken by the TS government from the RBI and also the loans taken by the state corporations from other financial institutions for infrastructure development projects like irrigation scheme, drinking water projects, etc.

The state government took loans through corporations and utilised them as capital expenditure. The government has spent the entire non budgetary loan amount of more than Rs 1 lakh crore to construct Kaleshwaram lift scheme, Mission Bhagiratha, Palamuru lift projects, Devadula scheme etc. Not a single rupee of the loans taken from the corporations was diverted for other purposes, but the centre had raised doubts on seeking loans through corporations.

Though the state explained how the funds were being utilized during the meeting with Central authorities. Raising loans through corporations is a normal practice, the officials said.