Education, social sectors get Raw deal in Telangana

Expenditure on the two key sectors on decline for the last 3 years: RBI study

​Hyderabad: Contrary to the popular belief and tall claims of the Telangana government that it is spending more on social welfare, the budget expenditure on key segments like education and other social sectors has been on a steep decline in the newly-created state for the past three financial years, according to an RBI study report released recently.

The 376-page report -- titled ‘State Finances: A Study of Budgets of 2016-17’ -- published by the Reserve Bank of India earlier this month revealed that spend on education constituted 11.2 per cent of Telangana government’s total expenditure during the financial year 2014-15. The expenditure on education came down to 10.5 per cent in FY16 and further down to a single digit 8.1 per cent (as per budget estimates) of the total spend last fiscal.

The TS government has not fared well on the social sector spending either. During the financial year 2014-15, the TS government earmarked 39.2 per cent of its total expenditure for the social sectors. Though the allocation increased to 43.4 per cent in FY16, it sharply went down in the last fiscal (FY17) and reached 39.6 per cent, a 3.8 percentage point drop year-on-year.

The social sector expenditure includes expenditure on social services, rural development, food storage and warehousing under revenue expenditure, capital outlay, loans and advances by the state government.

Interestingly, the Socio Economic Outlook-2017 (SEO-2017) report released by the Telangana government during this year’s budget session of the Assembly underlined the need for improving Human Development Index (HDI) value in Telangana, indirectly implying that the government was not spending enough on education and social sectors.

The “analysis on literacy and education shows that the state has to work substantially on literacy and education to improve its overall HDI ranking,” the SEO-2017 report noted.

The HDI is a composite statistic of life expectancy, education, and per capita indicators used by the United Nations Development Programme (UNDP) to rank countries in human development. Countries like India in turn measure the HDI for each state. The SEO-2017 report cited the HDI value for Telangana in 2004-05 at 0.343, lower than India’s value of 0.361.

Even as the TS government allocated lower part of its expenditure in the budget to education and social sectors over the last three financial years, the debt burden on the state has gone up significantly in the same period, according to the RBI study report.

In FY15, it had a debt burden of Rs 72,660 crore. The debt (outstanding liability) ballooned to Rs 88,720 crore in FY16. It crossed Rs 1 lakh crore and touched Rs 1,12,250 crore in FY17. The state also went on a borrowing spree at higher interest rates from the markets. According to the report, the government raised Rs 8,200 crore through market borrowings in FY15.

The gross amount raised zoomed to Rs 13,850 crore in FY16 and further to a whopping Rs 21,850 crore in FY17, a near three-fold jump in the market borrowings in three years.

As debt increased, so also the interest outgo. The gross interest burden, which was Rs 5,230 crore in FY15, increased by 37 per cent to Rs 7,160 crore in FY16. This further went up by 7.6 per cent to Rs 7,710 crore last fiscal.

Besides, wage bill for Telangana has shot up from Rs 10,800 crore in FY15 to Rs 18,120 crore in FY17, a growth of 67 per cent in three years. The wage bill was much higher at Rs 18,480 crore in FY16, the RBI report noted.