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ICRA boost to TS credit image
ICRA boost to TS credit image. The World Bank report on the ‘Ease of doing business’ disappointed the Telangana State, awarding it 13th rank among the States, but India Credit Rating Agency’s (ICRA) report has made Telangana, which is said to be the richest state, keep its ‘rich’ tag, and placed it in the ‘A’ category.
According to ICRA, which has given ‘A’ ranking to the Telangana bonds, the incumbent government has taken a slew of measures galvanising investors’ confidence. Bureaucratic hurdles and red tape are cut by introducing TS-iPass, which is attracting more investments from across India and abroad
The World Bank report on the ‘Ease of doing business’ disappointed the Telangana State, awarding it 13th rank among the States, but India Credit Rating Agency’s (ICRA) report has made Telangana, which is said to be the richest state, keep its ‘rich’ tag, and placed it in the ‘A’ category.
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ICRA’s ‘A’ credit rating to Telangana bonds is in contrast to the combined AP’s bond ratings at ‘A-‘ – a clear advantage of bifurcation for Telangana State. It highlights that the State has better prospects due to a robust financial situation. The rating will help attract investments to the State. ICRA assigns these rankings based on the repayment capacities of State governments for the loans raised in national and international markets.
Telangana has very good State’s Own Tax Revenue (SOTR). In Telangana, the total tax collected on GST/VAT/CST is Rs 22,834.54 crore since the formation of the new state from 02-6-2014 to 31-3-2015. Collection of taxes is robust at Rs 893.36 crore under minor acts, followed by professional tax (Rs 283.77 cr), entertainment tax (Rs 73.70 cr) and other taxes like luxury tax, entry tax and HRBT put together (Rs 128.44 cr).
As per the Advance Estimates for 2014-15, the per capita income of the State at current prices increased to Rs 1,03,889 from Rs 95,361 in 2013-14, registering a growth of 8.9 per cent, which is higher than the national per capita income of Rs 88,533. The per capita income of the State increased from about Rs 24,409 in 2004-05 to Rs 1,03,889 at current prices in 2014-15.
The growth in the Per Capita Income, which is higher than the national average, can also be attributed to the increasing fall in the population numbers in the State. The growth of total population has moderated to 13.58% in the decade (2001-2011) from 18.77% in the preceding decade.
According to ICRA, the incumbent government has taken a slew of measures galvanising investors’ confidence. Bureaucratic hurdles and red tape are cut by introducing TS-iPass to attract more investments from across India and abroad. Many MNCs evinced keen interest to invest in Telangana.
Recent visit of Chief Minister K Chandrashekar Rao to China is yielding results with China's Leo Group of Companies being keen to manufacture heavy duty pumps in Telangana with a likely investment of Rs. 1,000 crore. ITC announced Rs 8,000-crore investments.
Celkon and Makeno have signed an MoU with the Telangana government to invest $ 20 million for setting up a LED TV unit in Hyderabad. Two more Chinese companies in cell phone components and headphones have also come forward to invest in Hyderabad, it means the investments are raining in Telangana, due to futuristic features of Telangana Industrial Policy.
ICRA has noted that Telangana has low loan component in capital expenditure in comparison with other States. It is estimated that every rupee of capital expenditure in State generates expansion of the order of 2.45 times in the economic output. The agency also applauded the State for making huge investments in key programmes like Mission Kakatiya, Water Grid and in other major and minor Irrigation projects, as these investments lead to creation of assets and boost the economy.
Especially the investment in irrigation projects will improve the key sector of agriculture in the State, as the State farming community is facing severe distress with vagaries of monsoon. After factoring all the above points, the Agency accorded ‘A’ rating to Telangana. With this rating the State’s standing in national and international credit arenas will enhance.
It can acquire loans at lesser interest rates. The investor community peruses the ICRA ratings before putting money in the State. In the wake bleak possibility of any special status or package to Telangana, on the lines of that for Andhra Pradesh, the ICRA rating is a timely boost to the State government’s efforts at rebuilding the State. (The writer is a Deputy Statistical Officer in Telangana Government Secretariat)
By G Rajendera Kumar
