A half-hearted beginning

The maiden budget of Telangana claims to ensure judicious use of revenues for fulfilling the hopes and aspirations of the people. The budgetary allocations have to be analysed in this context. The Finance Minister has rightly called for reinventing and reorienting Telangana. But, allocations are incremental in nature. However, the budget made a few path-breaking attempts in certain sectors.

The disproportionately higher reliance on ground water for irrigation has made Telangana agriculture unsustainable. This is a direct result of total ruin of tank irrigation in the united state. Tanks used to irrigate 60 per cent of the net sown area in the state. This has plummeted to less than 9 per cent now. The budget rightly focuses on rejuvenation of tanks. Nearly 9,000 tanks are proposed to be restored this fiscal with an allocation of Rs 2,000 crore. But, outlays should translate into outcomes. Such schemes are prone to large-scale misappropriation of funds. The government should ensure that this scheme does not turn out into a fiscal bonanza for party workers.

The power crisis is crippling the economy and livelihoods. The budget makes an attempt to correct this. A provision of Rs 1,000 crore has been proposed towards investment in TSGENCO. This would barely meet the government equity in the power projects under GENCO. The government should have gone beyond the “business as usual approach” and made some bold investments. The allocations for power subsidies are kept at Rs 3,000 crore. This falls short of at least Rs 4,000 crore as compared to the actual requirement. Thus, there is a likelihood of a massive power tariff revision in 2015-16.

The allocations are grossly inadequate in the welfare sector. The government plans construction of two bedroom houses for the poor at a unit cost of Rs 3.5 lakh. Allocation of Rs 1,000 crore will enable construction of not more than 30,000 houses a year. This is a measly amount to create a state without homeless population. With far less budgetary outlays, the much publicised programme of providing land to the landless dalits will take 50 years to complete.

Pursuing the same fiscal path, the Telangana government has also inflated the budget figures to grab media headlines. The fiscal deficit is pegged at over Rs 17,000 crore which accounts for 4.79 per cent of GSDP. This is way above the target fixed by the FRBM Act. These estimates are contingent on realising ambitious revenue mobilisation targets and receipt of grants from the Centre. Past experience suggests revenue estimates are often unrealistic. Thus, the expenditure committed may not also stand. In such a scenario, the axe is likely to fall on social sector. Therefore, the immediate task is to ensure that revenues are realised so that the outlays would be a reality. The quality of public expenditure should be substantially raised by plugging pilferage of funds.