Hyderabad: Centre's tight fist hits new projects in Telangana State

Hyderabad: With the Telangana government reeling under a severe shortfall in the state-owned revenues, the Centre has dealt a severe blow by reducing state share in taxes has tightened the hands of the state government in taking up any new developmental programmes in the forthcoming budget.

This would mean that there is not much of possibility to take up Irrigation projects, big road networks and construction of huge buildings, including construction of the proposed Secretariat and other infrastructure-related schemes.

The 15th Finance Commission's latest recommendation to reduce state share from central tax to 41 per cent from 42 per cent has come as a big blow to the Telangana which is facing huge financial burden due to abnormal increase of revenue expenditure on salaries, pensions, social welfare schemes and payment of interests in the last two years, a senior official said.

In the backdrop of this situation, funds to be allocated under capital expenditure will be low this year. In the current financial year, the government had proposed Rs 35,000 crore capital expenditure as against Rs 49,000 crore in 2018-19 and Rs 57,768 crore (actuals) in 2017-18.

The allocations have been declined by 16 per cent in the current year when compared to the previous financial year.

Officials said that Telangana has been facing fiscal challenges ever since doubling the pension amount and the implementation of Rythu Bandhu scheme since 2018 which alone consumed more than Rs 30,000 crore from the state budget.

Sensing financial struggle after enforcing slew of farmer welfare schemes, the government floated corporations to mobilise funds to construct mega lift irrigation schemes –Kaleshwaram and Palamuru Ranga Reddy and Mission Bhagiratha.

"The Government anticipated healthy growth in state revenue collections and also timely release of state share from central taxes. Against the estimation of Rs 14,000 crore, Telangana has received only Rs 9,000 share till date as its share.

The TS government projected the state-owned revenue collections at Rs 75,700 crore but the state succeeded generating only 51,800 crore till December end. The possibility of achieving targets is ruled out by March end," official said.

On the other hand, the Centre stopped the release of state share from the central taxes GST and mulling to reduce tax devolution which comes as a bolt from the blue. In these circumstances, allocations under capital expenditure will be lesser and it may not cross Rs 30,000 crore in the new financial year.

After bifurcation, TRS Government accorded top priority to irrigation projects and development of infrastructure in the first four years between 2014 and 2018.

Several long-pending irrigation projects were completed and road network was strengthened by allocating not less than Rs 60,000 crore to Rs 70,000 crore every financial year till 2018. Now, the capital expenditure will cut by half, a senior official said.