Telengana government in serious trouble over shortfalls in finance

The centre and Telangana government is at loggerheads over how the latter plans to finance it's loans. Word has it that the reason Chief Minister Chandrashekhar Rao had refused to meet the Prime Minister few days ago at Hyderabad was due to the fact that the central government was in no mood to sanction any postponement in dues from the state. The state government had sent an SOS to the centre regarding non payment of salaries to government staff in various sectors due to lack of funds. It is learnt from reliable sources that 14000 crores is immediately required to clear all state payments of salaries and to service debts for the month of June.

A state cabinet meeting is being thought of by the Chief Minister to discuss this issue and take a decision on how to manage the outstanding funds. The Chief Minister is also miffed that the Center is allowing states who have high loans to arrange funds by selling bonds to service their shortfalls, but not so in the case of Telengana.

A decision is also to be taken on whether the state would approach the Supreme Court for help against the central government's order. Telengana claims that it is a surplus state and therefore should be allowed to raise funds through the bond route.


The issue is that the finance department of the state has just a day, before salaries are to be disbursed for the month of May. Payments are also due for welfare schemes like Raythu Bandhu and Asara pensions. The Kharif season also begins and the farmers would be depending on the much needed funds. 6000 crores have been planned to be arranged through taxes but the shortfall of around 9000 crores has no sources, other than raising money through the sale of bonds. Twice the sale of bonds for the month of April and May have been disallowed leading to a shortfall of 11000 crores. The reason cited by the centre for halting bonds has been that more than 145 lakh crores have been borrowed from the central funds without any payments. This huge amount from the Center was at the behest of issuing bank guarantees against the state-owned agencies and institutions. The central government has treated these bank guarantees as part of their debt whereas Telengana is opposed to it.

No wonder the chief minister has now decided to fight against this high-handed attitude of the centre, so to speak, and is thinking of concerted opposition to ensure the defeat of the Modi Government.