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Telangana heading fast to FRBM borrowing limit

Posted June 15th, 2021, 10:01 AM IST

Telangana heading fast to FRBM borrowing limit

The state government seems to be exhausting its borrowing limit much faster in the current fiscal 2021-22 over previous fiscal 2020-21.

The government is looking to raise Rs 3,000 crore more on Tuesday to meet Rythu Bandhu expenditure. It needs to credit Rs 7,508 crore as Rythu Bandhu assistance in the bank accounts of 63.25 lakh farmers from June 15 to 25.





The government's earnings have taken a severe beating in both the fiscals due to the outbreak of the first and second waves of the Coronavirus. With this, the government is depending heavily on loans to meet expenditure on welfare schemes, development programmes and administrative affairs.

The government has already borrowed Rs 3,500 crore this month. The government pinned its hopes on raising funds through sale of lands from July in addition to loans that were recently put up for e-auction. The government mobilised Rs 4,500 crore loans through auction of bonds in April and May.





It had proposed to raise Rs 47,500 crore through auction of bonds in Budget 2021-22. Of this, the RBI had permitted to raise Rs 8,000 crore in the first three months (April-June). But the government has raised Rs 11,000 crore in three months, which is over and above the permitted limit.

In 2020-21, the budgeted borrowing was Rs 33,191.26 crore, but the government had borrowed Rs 45,638.79 crore after the Centre raised FRMB (Fiscal Responsibility and Budget Management) limit from three to five per cent of the GSDP to help states tide over the Covid financial crisis.





Against this backdrop, finance minister T. Harish Rao made a request to the Centre on Saturday last during the GST Council meeting held by Union finance minister Nirmala Sitharaman to increase the FRBM limit to five per cent again this year as Covid second wave adversely impacted revenue earnings of states.

If permitted, the state government could mobilise an additional Rs12,000 crore over the budgeted borrowing limit of Rs 47,500 crore this fiscal.

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