CM KCR faces uphill task: Second term on and sluggish budget continues

Amid the present state of economic slowdown in the country, there was little hope of adequate allocations for the states from the Centre. Consequently, the Union government presented its budget on February 1 and allocated still lesser amounts than the last time.

Criticising the Centre on this, Telangana Chief Minister K Chandrasekhar Rao said, "It is a constitutional right of every state to have a share in the central taxes.

In the 2019-20 financial year, Rs 19,718 crore was rightful due from the Centre to the (Telangana) State. In the last budget, the Centre had announced that this amount would be paid to the State. But in the revised estimates, it was reduced to Rs 15,987 crore.

With this, in the present financial year, among the funds due from the Centre, there is a reduction of Rs 3,731 crore. This has led to the state financial planning going awry as the Centre imposed cuts in the release of funds to the State. The Centre is committing a great fraud and cheating on the GST front."

The meagre Central allocation has led to cuts in major sectors. For the agricultural sector, in 2019-2020 financial year, 3.65 per cent funds were allocated while in 2020-21, the allocation is 3.39 per cent only. Even for rural development, 4.37 per cent of funds were allocated in 2019-2020 while only 3.94 per cent has been allocated now.

For medical and health, in 2019-2020, the allocation was 2.24 per cent. And in 2020-21, the allocation is 2.13 per cent only. For education also, in 2019-2020, the allocation was 3.37 percent and now it is 3.22 per cent.

Apart from the reduced allocations, the Centre has not even paid the adequate compensation towards GST as mandated in GST Act and thus the taxes received by the State under indirect tax regime has also been affected. The GST collection stood below the benchmark growth of 14 per cent and an amount of Rs 1,137 crore is due.

The Centre has not given any clarity on the compensation funds. The Centre has accepted the proposals of 15th Finance Commission and reduced the State's share of Central tax devolution from 42 per cent to 41 per cent. Telangana State's share in the divisible pool has been reduced from 2.437 to 2.133 per cent.

With this, there will be direct decrease of Rs 2,381 crore of funds from the Centre to Telangana State in 2020-21. The State's share of central taxes is Rs 16,726 crore in 2020-21 financial year. This would have an adverse impact on Telangana's development plans.

Furthermore, the welfare schemes like Aasara pensions will take a direct hit. It will be difficult to maintain the major irrigation projects like Kaleshwaram. Interestingly, it is to be noted that a Central team that visited Telangana to inspect the project has praised the first-of-its-kind Kaleshwaram project but where are the Central funds? Why did not the Centre allot funds for this project?

The State has taken up Mission Bhagiratha and Mission Kakatiya programmes, besides Kaleshwaram project. The State has repeatedly sought Central allocations for these schemes but there is no mention of this in the Union budget for 2020-21.

Asked about what his party is expecting from the Telangana government in the ensuing budget session, an AIMIM member said, "We acknowledge the economic slowdown and the lesser Central allocations. And so we just want the Telangana government to continue with the welfare programmes and take loans, if necessary, for the development schemes like irrigation and power projects."

The Telangana Legislature's budget session is likely to commence in the first week of March and tough time awaits Finance Minister T Harish Rao for managing the State's finances in the next financial year. With this state of affairs, it will be interesting to see how the shrewdness of KCR will work out in steering the State through this financial crisis and in keeping the masses and the opposition parties satisfied.

KCR's party has put a grand show by scoring victories in municipal and panchayat polls after retaining power after the Assembly elections based on its work of previous term to fulfil the promises made in its poll manifesto. The people are waiting to see how things work out now.

However, it is quite clear that the economic slow-down in the country is affecting flow of funds from the Centre and this is stalling the welfare activities and developmental schemes in the State. Thus, TRS government in Telangana has to make do with what it has.