Telangana government expects stress on state finances


A sharp reduction in releases from the Centre towards tax devolution in the current month and the prospects of revenue loss to the exchequer on account of lower property transactions etc due to demonitisation of high value currency notes are worrying the government of Telangana, which is among the high spenders on social sector programmes.

Telangana chief minister K Chandrasekhara Rao has met with Governor E S L Narasimhan late yesterday evening to discuss the adverse impact on state finances by these and other factors, sources in the government told Business Standard.

Telangana is expected to get Rs 13,995 crore as its share in Central taxes for the current financial year, which is payable in 14 equal installments of Rs 997 crore each.

The state has received six installments of Rs 997 crore till last month while it has got only Rs 585 crore in the current month, as an indication of what was in store for the rest of the financial year, according to the government sources.

However, Telangana was not alone in receiving lower devolution from the Centre in the current month. Andhra Pradesh was given Rs 970 crore as its share in taxes from the Centre as against the monthly devolution of Rs 1,760 crore, according to AP government officials.

The government programmes will take a serious hit with the reduction in the Central devolution in the middle of an year on top of a possible fall in the state's own revenues, according to the officials.

The state government fears that its own income from the revenue earning departments such as Stamps and Registrations and Excise would fall steeply in the coming months due to demonitisation of high value currency notes, adding further stress on the state finances.

On an average the government gets Rs 320 crore in revenue per month from the land and property related transactions while this could fall by as much as 90 percent going by the sharp fall in transactions during the last couple of days, according to the officials. The commercial taxes and excise revenues are also expected to be impacted by the Centre's action, they say.

The government spending on social sector programmes in Telangana and Andhra Pradesh is very high.Both the states have also been implementing the farm loan waiver programme as part of the election promises made by the ruling parties of both the states.

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