CM KCR holds review meeting on Telangana's financial position

Hyderabad: The Union government is making tall claims on a daily basis both in the Parliament and outside that there is no effect of an economic slowdown in the country but the facts are quite different from this, a press release from the Chief Minister's Office stated on Saturday.

Chief Minister K Chandrashekhar Rao held a review meeting on Saturday at Pragati Bhavan on the State's financial position - Funds to come from the Centre and other issues. Government's Chief Advisor Rajiv Sharma, Special Chief Secretary Somesh Kumar, Principal Secretary (Finance) Ramakrishna Rao, CMP Principal Secretary S Narsing Rao, Special Secretary Bhoopal Reddy and others participated. In this review meeting, the actual financial situation and hard-hitting facts have emerged.

The Centre decides on the share of the States in the taxes and they are announced in the Budget. For the financial year 2019-20, for the Telangana State under the taxes sharing, the Centre announced in its Budget that it will give Rs 19, 719 Crore. This is 6.2 per cent more than the allocations made in the 2018-19 Budget of Rs 18, 560 Crore. However, in the last six months, the Centre gave Rs 10, 304 Crore only as of the tax share. In the last financial year for the eight-month period, the Centre gave Rs 10, 528 Crore. In other words, compared to 2018-19 financial year, this financial year till date the Centre gave Rs 224 Crore less. This would mean that as against 6.2 per cent hike as proposed in the current financial year Budget, there is, in fact, a decline of 2.13 per cent. Instead of getting Rs 700 Crore more from the Centre, the Telangana State is given Rs 924 Crore less.

Principal Secretary (Finance) Ramakrishna Rao recently went to Delhi and brought to the notice of the Central government officials that Telangana State got 8.3 per cent less on the tax share account. He said due to the decrease in the fund's allocation, several schemes in the State would face difficulties. Responding to him, the central government officials said that situation is grim and cautioned that the decrease may well go up from 8.3 per cent to 15 per cent. When the state government officials were upset that there is a decrease of 8.3 per cent of the funds, the central government officials said that the decrease may further go up to 15 per cent. 15 per cent decrease in funds from the Centre would mean a decrease of Rs 2,957 Crore from the funds from the Centre, which is due to the state government.

There is no match between what the Union Ministers are proclaiming in the Parliament and the ground realities. This is very surprising. If this situation continues, the state's financial position may turn into a grave situation. It is like a person losing his clothes when in fact he was asking for a morsel of food. The economic situation is in a state uncertainty. The CM has instructed the Principal Secretary to Finance to decrease funds for all the departments in tune with the decrease in funds from the Centre. The CM has also instructed all the departments to reduce expenditure.

CM's letter Union Finance Minister

On Saturday, the CM wrote a letter to union finance minister Nirmala Sitharaman requesting her to release funds to the State as stipulated in the Budget or else declare the facts.

Centre's faulty policy

It was clear at the review meeting that it was due to the faulty policies of the Centre has to lead to the present difficult situation. The meeting was of the firm opinion that the State had no option but to exercise self-control. The CM in this regard suggested that all the departments should cut their expenditure and observe fiscal discipline.

Centre not realising IGST funds

Meanwhile, the Centre had also failed to give Rs 2, 812 Crore IGST funds as part of the GST for the year 2017-18. The Comptroller and Auditor General also mentioned this clearly in the Report.

Rs 1, 719 Crore GST compensation due from the Centre

The Centre while implementing the GST Act had assured the States that it would compensate if the GST revenue is less than 14 per cent. Due to the economic slowdown prevailing in the country, the Telangana state is not getting 14 per cent of GST collections. Moreover, the Centre has to give the State Rs 1, 719 Crore as GST compensation dues. The CM asked the Centre to release these funds in his letter to the union finance minister.

CM planning to meet the PM

The CM is planning to visit Delhi to meet Prime Minister Narendra Modi and Finance Minister Nirmala Sitharaman to apprise them of the difficulties arisen with funds not being released from the Centre. The CM wants to go to Delhi in the next five to six days along with the officials to explain the intensity of the situation.

Note to Cabinet with all the details

The CM has instructed the officials from the Finance department to prepare a detailed note on the State's financial situation and the funds, which are due from the Centre to be placed before the State Cabinet on Dec 11. The CM also wanted the ministers and officials to follow fiscal discipline in tune with the existing economic situation in the state.