Telangana CM K. Chandrashekhar Rao  (MINT_PRINT)
Telangana CM K. Chandrashekhar Rao (MINT_PRINT)

Telangana feels pinch of economic slowdown, KCR asks departments to cut expenditure

  • 'Tax devolution in Telangana is 19,719 cr but state has received only 10,304 cr till November,' CM KCR wrote to FM Sitharaman
  • During Saturday’s meeting with state officials, KCR instructed principal secretary (finance) to decrease funds for all the departments in tune with the decrease in funds from the Centre

Hyderabad: After witnessing high growth rate in its GDP over the last few years, Telangana's economy is seemingly in a precarious situation this financial year. The situation has also forced Chief Minister K. Chandrashekhar Rao (KCR) to write to union finance minister Nirmala Sitharaman, to give the state more Goods and Services Tax (GST) compensation, given the shortfall in collections this financial year.

In his letter to Sitharaman, KCR said that according to the union budget 2019-20, the tax devolution to Telangana is 19,719 crore, out of which the state has received only 10,304 crore till November. KCR pointed out that Telangana had received 16,451 crore in tax devolution in 2018-19, and had in fact received 224 crore more till November during the last financial year.

“So instead of receiving an enhanced amount (this financial year), the state has received less," said the letter. Further, after a meeting with government officials on the matter, Rao, in a statement to the press, said that the state’s financial situation may soon turn “grave". “There is no match between what the Union Ministers are proclaiming in the Parliament and the ground realities. This is very surprising. The economic situation is in a state uncertainty," he added.

Moreover, the economic slowdown that has impacted the entire country has also resulted in Telangana’s industrial sector also taking a hit.

According to data from the state's Industries department, only 322 industries commenced operations in this financial year (till November), as against 2,032 in 2018-19 and 2,739 in 2018-17, which is evidently much lower than the previous year. When contacted, a senior official from Telangana’s Industries department did not wish to comment, but added that there are still four months for the financial year to end (for the numbers to increase).

The chief minister’s meeting on the state’s finances also comes in the backdrop of him decreasing the budget this financial year. Earlier in September, while presenting a revised budget, KCR cut the state’s total expenditure for 2019-20 to 1.46 lakh crore from the projected 1.82 lakh crore projected in February, citing economic slowdown in the country.

For 2019-20, Telangana estimated a 15% growth in tax revenue of which only 5.46% was realised in the first quarter of this financial year, Rao had said then, and added that it was a result of the economic slowdown in the country, especially after the state had registered an average of 21.49% of revenue growth rate in the last five years.

The issue will put more pressure on him and the state apparatus, given about 60 lakh land-holding farmers in the state have to be paid 4,000 per acre for both the Rabi and Kharif seasons under the ‘Rythu Bandhu’ input subsidy scheme alone.

During Saturday’s meeting, KCR also instructed the principal secretary (finance) to decrease funds for all the departments in tune with the decrease in funds from the Centre and also directed all departments to reduce their expenditure.

“It is not like KCR suddenly discovered a problem yesterday, it has been building up. One one side he talks about the slowdown, and on the other side, he goes and announces major developmental plans during the Huzurnagar bye-polls recently. Moreover, he had also said that he can’t give the Telangana State Road Transport Corporation money, but changed track after TSRTC employees ended their strike," said political analyst Palwai Raghavendra Reddy.

Reddy added that people have a lot of expectations on KCR’s administration in terms of welfare. “Even KTR (IT Minister and KCR’s son K.T. Rama Rao) is not saying much these days. The government now will to fulfil its promises, be it Rythu Bandhu or anything else, otherwise it will have political political repercussions," he noted.

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