Hyderabad: The Centre decided to stop the Fiscal and Responsibility Budget Management Loans (Act) (FRBM) for Telangana, which will now prevent the state from open market borrowing. The decision was announced on Monday.
The Union finance secretary TV Somnathan held a virtual meeting with secretaries of various state. However, he did not make any commitments on behalf of the Centre to allow Telangana to raise loans under FRBM for the current financial Year.
The Centre’s move is bound to hamper welfare schemes of the state government such as Rythu Bandhu, Dalit Bandhu among others. Referring to these schemes Somnathan said “We will see”, which is a cause of concern for the Telangana government.
In case the Centre bars the State from raising loans under FRBM, it is likely to turn into a Centre-state tussle. In such a scenario, the state government may challenge the Centre’s decision in the Supreme Court.
The Telangana government has termed the Centre’s decision as a vindictive one. The state government has blamed the Union government of discrimination against it as a few loans were being placed under the FRBM. On the other hand loans from HUDCO and other banks are being considered as state loans.
Telangana proposed to raise a budget of Rs 53,970 crore open market borrowings in 2022-23. In the first quarter of the current financial year, Telangana projected to raise 15,000 crore which is decided by the Reserve Bank of India’s calendar of market borrowings by the state governments. Out of the 15,000 crore, the state was supposed to raise Rs 6,000 crore by May 2.
Earlier, the Centre had cut the loans for Andhra Pradesh by 30,000 crore. If the same is applied to Telangana, it may not receive any loans in the financial year 2022-23.
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