Faced with a huge shortfall of tax revenue because of the pandemic, Telangana government proposes to raise Rs.16,000 crore by selling unused land

T. Harish Rao, Finance Minister, Telangana.

Faced with a huge budgetary outlay thanks primarily to a shortfall in revenue because of the COVID-19 pandemic, the Kalvakuntla Chandrashekhar Rao-led Telangana Rashtra Samithi (TRS) government in Telangana has announced that it was looking to raise Rs.16,000 crore from the sale of land.

Replying to a question raised by Bhatti Vikramarka, leader of the Congress Legislature Party (CLP), during a discussion on the Budget in the State Assembly, Finance minister T. Harish Rao announced that there were several unused parcels of land in the State and these would be hived off. The State government had planned to get additional income from the sale of land last year, but the plan did not materialise because of COVID-19, he said. The government had even created a separate head in the Budget last year to raise funds thorough land sale.

Telangana, according to some estimates, has suffered a revenue loss of Rs.1 lakh crore. Given this precarious financial situation, financial experts said that the State had just two ways of filling its coffers: either sell land, or raise fresh loans. Said Harish Rao: “We have planned and made those Budget provisions. We are aware of capital receipts.” The Minister also disclosed that the State hoped to generate income by announcing a new mining policy and increasing non-tax revenue.

Saying that the debt was within the Gross State Domestic Product (GSDP) and the loan ratio decided by the Government of India and the Reserve Bank of India, Harish Rao dismissed the opposition’s claims that the State government had a huge debt and that the government would be unable to manage it. He said that Telangana was fourth from the bottom in the GSDP-debt burden ratio. He said: “Loans cannot be more than the ratio decided by the Central government, we are well within the limits. Congress-ruled Punjab is in the third position when public debt and GSDP ratio of the State is taken into account; it stands at 31 per cent there.”

Continuing his submission on the floor of the Assembly, he said: “The debt is about Rs 2.8 lakh crore now. In addition, we give guarantees to corporations, for example, if we give Rs.20,000 crore guarantee to the Civil Supplies Corporation to buy produce, then it will be paid back to that corporation by Food Corporation of India. How can that be called a loan?” The Minister informed the House that in the next financial year, the State government would have to pay around Rs.26,000 crore by way of debt-servicing.

Last year, the State’s proposal to raise Rs.10,000 crore by sale of housing units as part of the Rajiv Swagruha scheme and the sale of other parcels of land did not materialise. In addition to this, non-tax revenue, which was proposed at Rs.30,000 crore, actually netted the State not more than Rs.2,000 crore.

The government does not want to cut back on the allocations for its numerous welfare schemes, so it may be forced to shelve some of its infrastructure dreams.