The Telangana State government has initiated the preparatory exercise for Budget 2021-22 with a positive mindset, despite the tightrope walk it has to do for balancing expenditure on the development and welfare fronts. 

The Budget session is likely to commence in the second week of March. With the State economy showing signs of revival after being grim under the impact of Covid-19 pandemic for most part of the current fiscal, the mood in the government is marked by positivity and optimism, bolstered by the fact that all the revenue-generating departments have registered positive trends. “From April to January of 2020-21 fiscal, all revenue-generating departments overall are in the positive, except Stamps and Registration; compared to the corresponding period of 2019-20. Even for the Registration Department, January month has been good and it netted to Rs.900 crore, as against Rs.550 crore of corresponding period of last fiscal. We hope to improve State revenues in these two months before the close of financial year,” said official sources.

The hopes of the State to get a fillip from the Central budget presented by Union Finance Minister Nirmala Sitaraman did not get a leg-up and its appeal for increase in the share of devolution in central taxes to States did not get a positive response from the 15th Finance Commission. But contrary to the perception that the State’s share in devolution of Central taxes fell for the year 2021-22, it remained more or less the same as that of current fiscal, official sources clarified.
The State’s share in devolution of Central taxes is 2.102 per cent for 2021-22, while it was at 2.133 per cent in 2020-21. The State’s share though was better at 2.437 per cent in 2019-20 under 14th Finance Commission. The 15th Finance Commission recommended the share of central tax devolution to States at 41 per cent in the light of the fact that the number of States is now 28, instead of 29, after Jammu and Kashmir was bifurcated into the Union Territories of J&K and Ladakh.

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The State will get about Rs.13,990 crore under various heads like GST, income tax, corporate tax, customs, excise duty and service tax under the Central tax devolution, while the anticipation was to get about Rs.18,000 crore in 2021-22.  Telangana being a progressive State has no cushion to fall back on revenue deficit grant sanctioned by the 15th Finance Commission to some States, including the neighbouring Andhra Pradesh.

Meanwhile, for the current fiscal 2020-21, the previously expected shortfall in revenues is Rs.50,000 crore.  Various departments, however, are confident of bringing it down and at least match the revenue of last year in just 10 months of this year, despite lockdown in the beginning of 2020-21. The Finance Department understandably takes solace from the fact that it is not a small achievement when the economic activity was stalled for about 45 days.  Last fiscal, out of total revenue of Rs.95,000 crore, State’s own tax and non-tax revenue was about Rs.65,000 crore.

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Chief Minister K Chandrasekhar Rao is keenly tuned into the budget preparatory exercise started by the Finance Department and appraised of the fund allocation to the State under the 15th Finance Commission and through the Union Budget for 2021-22. Though the State submitted a memorandum to the 15th Finance Commission seeking financial assistance to various schemes, the Commission only recommended Rs.2,350 crore towards maintenance fund for Mission Bhagiratha piped drinking water supply scheme to households. The Centre is yet to accept the Finance Commission recommendations for special funds to the States. The request of the State to include cess and surcharges collected by the Centre under the Central taxes so as to get a larger share has not been considered by the Centre. As a result, the States will forego a share in the agri cess introduced by the Centre on petrol and diesel in the Union Budget.

However, KCR’s brief to the Finance Department is to ensure smooth flow of funds to the priority schemes in 2021-22 as in 2020-21, which had a budget outlay of Rs.1.87 lakh crore. Obviously, the Budget outlay for next fiscal is bound to be higher, given the government’s commitment to implement the PRC recommendations to government employees.”We have to strike a balance between the capital expenditure to sustain growth momentum and revenue expenditure like salaries and pensions and debt servicing.”

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One positive feature is the FRBM limit has been increased to 4 per cent of GSDP, but the State may not be able to raise additional market borrowings over and above 4 per cent as Telangana it is not willing to implement the power sector reforms proposed by the Centre.

Apart from exploring avenues and pushing for resource mobilisation such as land bank monetisation, efforts will be made to further streamline GST collections, non-tax revenue as the TRS government is aware that it can’t put off election promises like unemployment dole for long and expedite its Two BHK scheme when the opposition parties , particularly the BJP, have laid bare their ambitious plans to give a stiff challenge to the ruling TRS in the next General Elections in the wake of some setbacks it caused to the ruling party in the Dubbak by-election and the Greater Hyderabad Municipal Corporation election. #KhabarLive #hydnews