Telangana government which has done well in delaying the doubling period for COVID-19 positive cases way above the national average to contain the spread of the disease is now exploring how to tide over the severe financial crisis due to steep fall in revenue.
The State went into lockdown mode from March 22 in view of the pandemic. With all educational institutions, industries , institutions and commercial establishments shutdown to enforce social distancing and economic activity almost coming to a standstill barring essential goods and services, the State revenues were hugely impacted.
The State’s own tax revenue which used to be around ₹400 crore a day dwindled to less than ₹10 crore and by the end of April, the State just earned a revenue of ₹500 crore — a 95 % fall in its tax revenue. There was zero revenue from excise and liquor (against ₹1,400 crore) stamps and registration (₹880 crore) and the motor vehicle tax (₹400 crore) while the VAT on petroleum resources was only about ₹50 crore as against normal revenue of ₹1,500 crore. The State GST was only about ₹350 crore to ₹400 crore against ₹3,000 crore.
The State borrowed ₹4,000 crore from the market in April as against ₹2,500 crore it would borrow in a month in line with the Fiscal Responsibility and Budget Management (FRBM) norms. The lockdown was announced soon after the State presented its budget outlay of ₹1.82 lakh crore for 2020-21, with an increase of 28.7 % over the revised estimate of 2019-20.
At that time itself, one thought it was an ambitious target given the economic slowdown the country was going through. But None expected the pandemic would play havoc with the State revenues. Against the income of ₹500 crore, State government had to spend close to ₹10,000 crore in April including ₹1,800 crore towards salaries and pensions at 50 % and75 % deferment, ₹2,400 crore towards debt servicing, ₹870 crore towards Aasara pensions, ₹830 crore towards power subsidies, ₹2,400 crore towards COVID relief assistance of ₹1,500 to every white ration cardholder and 12 kg of rice, releases to medical and health department.
The 20 % cut in State share in the Central devolutions saw State receiving only ₹982 crore as against ₹1,200 crore in April. “We pulled through with some savings apart from borrowings and what trickled from Centre under Centrally Sponsored Schemes and about ₹200 crore donations to the CMRF,” sources said.
Chief Minister had already written to the Centre requesting that the FRBM limit be increased from the present 3 % to 5 % to help it borrow more, declare moratorium on repayment of loans and interest for six months, special assistance under ‘quantitative easing’ from the RBI to help various sectors of economy specially MSME hit by the COVID crisis. “However there is no response so far to our request. The situation in May will be even difficult without help from the Centre,” sources said.
