HYDERABAD: The country’s youngest state scores high on gross state domestic product (GSDP) and per capita income growth indicating it is on the right track, but it is the debt burden that has become Telangana’s Achilles’ heel, casting a long shadow over its fiscal well-being.
Nine years after formation, the borrowings as well as the outstanding guarantees have many experts worried about the financial slippery slope that the state has to navigate.
Barring the pandemic years, the state’s growth has always been positive. But the tendency to finance expenditure by increasing its debt has been frequently red signalled by experts.
According to data submitted by the Telangana government to the Comptroller and Auditor General (CAG), the state’s public debt is estimated to be 3.29 lakh crore for the 2022-2023 fiscal.
The debt burden was 2.85 lakh crore in 2021-2022; 2.44 lakh crore in 2020-2021; and 2.05 lakh crore in 2019-2020 – clearly showing that over the years the state has relied heavily on borrowings. Moreover, this is just about market borrowings, in addition Telangana has given guarantees to state-owned corporations.
The golden rule of finance, according to experts, is that when money is spent on capital investments such as building roads and other projects, it will generate more money and help the financial situation become stable.
“Although Telangana has many positive signs, the schemes bill shows that there is undoubtedly a risk. The state still has time to correct the course when it comes to borrowings if the balance between revenue and capital expenditure is maintained and a realistic view of spending money is taken,” said Chittedi Krishna Reddy, assistant professor, school of economics, University of Hyderabad.
