Telangana Cong already has a problem: Who'll foot the bill for 'guarantees'?

Hyderabad: With Telangana voting the Congress to power recently, ending the ten-year rule of the Kalvakuntla Chandrashekar Rao-led Bharat Rashtra Samithi (BRS), the focus in 2024 will be on how the state, which is struggling to meet its daily expenditure, will mobilise resources to foot the bill for the welfare schemes announced by the grand old party in its manifesto.

Implementation of the six guarantees given by the Congress during campaigning, and a host of other promises made by the grand old party means the welfare budget will have to be more than doubled at Rs.1.2 lakh crore but there is still no clarity on how the new government will find the means to meet the additional expenditure.

Going by the new government’s own assertions, there is fiscal stress and the state is staring at a debt crisis left by the KCR Government.

With Telangana’s revenue and revenue expenditure being almost equal and the state unable to go for any further borrowings due to the legacy debt left by the BRS Government, the Revanth Reddy-led Government has its task cut-out.

The new government is yet to come out with an estimate of the funds required to fulfil the six guarantees, even though it has promised to implement them in 100 days. This will be a huge challenge.

Immediately after assuming office on December 7, the Congress government decided to release a White Paper on Telangana’s finances and the financial health of power distribution companies and government-run corporations, saying it wants to place the facts before the people.

Two weeks later a White Paper on state finances was tabled in the Telangana Assembly, presenting a grim picture.

Deputy Chief Minister Mallu Bhatti Vikramarka, who is also the Minister for Finance, told the House that the state has no money even to meet daily expenditure and that it is staring at a debt crisis with outstanding debts of over Rs.6.71 lakh crore.

He highlighted the financial indiscipline of the previous KCR Government during its 10-year rule for this fiscal stress. Telangana, which was a revenue surplus state in 2014, is today depending on the ways and means advances from the Reserve Bank of India on a daily basis, he said.

Chief Minister A Revanth Reddy said his government inherited empty coffers from the KCR Government. He admitted that they realised this only after taking the reins of power in their hands that the previous BRS Government had left nothing in the state Treasury.

There are various estimates on the money required to implement the six guarantees. A conservative estimate is that the government will require Rs.70,000 crore every year.

According to Lok Satta party founder Jayaprakash Narayan, the Congress Government in Telangana may have to spend Rs.1.2 lakh crore a year to implement various welfare schemes, including the existing ones.

The former IAS officer pointed out that the state government’s revenue and revenue expenditure for 2022-23 is almost the same at Rs. 1,72,000 crore, while the size of the state budget was Rs.2.90 lakh crore.

“If the entire budget goes towards welfare schemes and salaries and pensions, there will be nothing left for capital expenditure such as infrastructure works,” he said.

Two days after taking charge, the Congress Government launched free bus rides for women in State Road Transport Corporation buses and also enhanced the annual coverage under Rajiv Aarogyasri, a health insurance scheme for Below Poverty Line (BPL) families to Rs.10 lakh from Rs.5 lakh.

Telangana State Road Transport Corporation (TSRTC) Managing Director, VC Sajjanar, revealed that with the implementation of the free travel scheme, the TSRTC’s daily revenue of Rs.14 crore will come down by 50 per cent.

The free bus ride is one of the components of ‘Mahalakshmi’, the Congress’ guarantee for women. It has also promised Rs.2,500 monthly financial assistance to every woman head of BPL families.

The AIMIM’s leader in the Assembly, Akbaruddin Owaisi, mentioned in the House that there are 89.99 lakh BPL families in the state and if Rs.2,500 is paid to one woman in each family, this alone will require Rs 26,997 crore.

Providing cooking gas cylinder to families for Rs.500 may require another Rs.5,399 crore. He believes that the implementation of the guarantees and other promises will require Rs.3.10 lakh crore while the state budget is only Rs 2.90 lakh crore.

According to him, the six guarantees alone will require Rs 2.16 lakh crore annually. Enhancing investment support for farmers to Rs.15,000 an acre from Rs.10,000 at present, may require Rs.6,000 crore.

Nearly 17 lakh tenant farmers, who were excluded by the BRS Government from Rythu Bandhu, will now be covered under Rythu Bharosa, as the scheme has been rechristened.

Bonus of Rs.500 on every tonne of paddy may need another Rs. 7,500 crore. Under its guarantee for agriculture, the Congress also promised Rs.12,000 financial assistance for every agricultural labourer. There are about 25 lakh agricultural labourers and this scheme may require Rs.3,000 crore.

Fulfilling the promise of waiver of farm loans up to Rs.2 lakh is also estimated to cost Rs.36,000 crore.

To implement the promise of 200 units of free power, the government will have to provide an additional Rs. 4,500 crore. Enhancing monthly pension from Rs.2,000 to Rs.4,000 for various categories of beneficiaries like widows, senior citizens, single women may also put an additional burden of Rs. 22,200 crore.

House site and Rs.5 lakh for construction of houses for an estimated 32 lakh homeless families may need another Rs. 25,000 crore. The Vidya Bharosa card of Rs.5 lakh for students may cost Rs. 38,894 crore.

When the new government presented the White Papers on state finances and also on energy, the Opposition parties alleged that it was trying to find an excuse to run away from its promises made during the election campaigns.

However, the finance minister assured the Assembly that every effort would be made to increase the state's resources and direct expenditures toward the uplift of the impoverished, while reducing unnecessary spending.

“The new Government is determined to implement all the six guarantees which were promised by the party, based on which the people of Telangana had given the mandate for change. The Government is determined to overcome the fiscal challenges in a responsible, prudent and transparent manner,” said Mallu Bhatti Vikramarka.

Two days ago, the government embarked on a massive exercise to receive applications for the six guarantees. However, a common application form for all six guarantees and the condition that only White Ration Card holders would be eligible, created doubts among Opposition parties about the government’s intention.

BRS’ Working President, KT Rama Rao, alleged that the Congress fooled the people by making impractical promises and the real game for the government starts now.

“Do you calculate and then make promises or you make promises and then do the math,” he asked.

Chief Minister Reddy, however, called the BRS’ reaction “withdrawal symptoms” after losing power. He remains confident that his government will fulfil all the promises in a time-bound manner.

Revanth Reddy believes that the state can achieve this by putting an end to misuse of public money and corruption. Revanth Reddy also faces the challenge of filling two lakh vacancies in government departments in 2024. He will also be under pressure to immediately implement the promise of Rs.4,000 unemployment allowance.

The anger among the youth over the previous BRS Government going back on its promise of unemployment allowance and its failure to provide government jobs was a key factor in the Congress party’s victory. Revanth Reddy knows that he can’t afford a backlash from this segment.