The State government has landed in a piquant situation in terms of finances as the Centre is yet to give its approval to the State government to raise open market borrowings through the Reserve Bank of India.
As a result, the State government could not avail of the ₹3,000 crore OMBs it proposed to raise in two instalments (April 11 and 26) in April and another ₹3,000 crore in the first week of this month (May 2). The State government, in the indicative calendar of borrowings released by the RBI, proposed to raise ₹15,000 crore through OMBs during the first quarter, but its efforts did not materialise thanks to the delays on the part of the Centre in giving its nod.
The shortfall, officials fear, is likely to have an impact on free flow of funds to the slew of welfare and developmental programmes, primarily Dalit Bandhu for which budgetary provision of ₹17,700 crore and another flagship scheme Rythu Bandhu for which ₹14,800 crore had been made for the current financial year. Resorting to OMBs to overcome the shortfall in finances is a common feature and several States avail of the facility to meet their immediate financial needs.
The State, however, should take the approval of the Centre under the provisions of Article 293 of the Constitution. Though grant of permission has been a routine affair thus far, the Centre this time around is said to have raised certain queries about the financial health of the State reportedly on the off-budget borrowings and guarantees given to corporations.
Interestingly, the Comptroller and Auditor General of India, in its latest report, expressed concern over the off budget borrowings claiming that the percentage of the outstanding liabilities would be way above the limit if these were considered. Senior officials told The Hindu that the government had addressed elaborate communication to the Centre seeking its permission for raising OMBs through the RBI.
“They raised some more queries. We are in the process of responding to them,” a senior official said lamenting that the Centre was resorting to such “dilatory tactics” for the first time. If delayed further, the issue had the potential to become one more bone of contention between the State and the Centre whose relations are already showing signs of strain.
