Telangana government raises a stink over Union FM's cap on borrowings

Nirmala Sitharaman
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Nirmala Sitharaman

Highlights

The Telangana government has registered a strong protest before the Union Finance ministry for not giving permission to go for borrowings from public financial institutions in 2022-2023 financial year.

Hyderabad: The Telangana government has registered a strong protest before the Union Finance ministry for not giving permission to go for borrowings from public financial institutions in 2022-2023 financial year.

The ministry on Monday conducted a video conference with the State secretaries to discuss special assistance to the States for capital expenditure, guidelines to seek borrowings for 2022-2023 financial year and establishment of a nodal agency to seek fund for the Centrally-sponsored schemes.

Finance Secretary K Ramakrishna Rao strongly objected the Centre's restrictions on borrowings by the State. It was nothing but the Centre's discrimination towards the State, he said.

"The State was borrowing money within the limits of FRMB and enforcing new guidelines from 2020-2021 are uncalled for."

The State government has constituted corporations and borrowed money for development programmes.

The inclusion of borrowings from corporations under FRMB limit is highly objectionable, he said. "It was unfair the Centre considered the loans taken by the State corporation as the State debts. The government has taken loans under capital expenditure and spent on infrastructure projects."

He pointed out that the Centre was considering the loans taken from HUDCO and NCDC as State debts and other borrowings taken by the State corporations as debt.

The 15th Finance Commission also did not make any specific recommendations on the State borrowings and the sudden decision to consider the 'off budget' borrowings in the State as debt is not a welcome decision, Rao said.

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