Telangana heads for financial crisis; stops release of all funds

​Hyderabad: The Telangana government has stopped the release of funds to all departments considering the State had suffered huge revenue loss due to demonetisation of Rs 500 and Rs 1000 currency notes.

As a way to ease the fiscal burden, the government has imposed a slew of financial restrictions like putting a bar on non-plan expenditure, enforcing austerity measures in all departments and stopping monthly payments to the contractors who had taken up irrigation, road and other infrastructure works with immediate effect.

Welfare schemes would also face the heat as the release of funds for the payment of pensions under Aasra pension scheme, fee reimbursement arrears, Kalayana Laxmi scheme and for self-employment schemes would be further delayed in December.

Top officials of the State Finance Department told The Hans India that the State was facing an ‘unprecedented situation’ with the sudden drastic fall in the revenues for the last one week as the financial transactions had come to a grinding halt with the stoppage of the circulation high denomination currency notes.

As a result, normal tax collections have dipped to a mere Rs 15 crore to Rs 20 crore from the average Rs 120 crore to Rs 150 crore registered every day.

Although the government got some relief from increased tax collections occasioned by allowing people to pay their pending taxes and arrears by using old Rs 1,000 and Rs 500 notes in the municipal corporations and panchayats, officials pointed out that the main revenue-generating departments - Commercial Taxes, Excise, Transport and Stamps and Registration wings bore the brunt of the demonetisation aftermath.

The sudden scarcity of currency notes had reduced the purchasing power of consumers, which contributed to a drastic decline in the sale of liquor, vehicles, goods and land registrations.

A sum of at least Rs 3,000 crore is required for the payment of salaries and pensions to all government employees and another Rs 1,000 crore is required for the payment of debts and interests every month.

In the present circumstances, the officials said, the only option before the government was maintaining financial discipline until the tax collections are normalised.

All the departments have been told to stop sending requests for the release of funds in November and December in the third quarter of this financial year. Under the plan, no fund would be released except for establishment purposes.

The departments were also instructed to stop spending money under the non-plan budget. The department secretaries have been requested to forward financial requisitions only in cases of exigencies.

All payments to contractors have already been stopped this month as the State is reeling under financial crisis due to non- release of Central funds and non-realisation of revenues expected from land sales in the first two quarters of this financial year.