Govt. left with a borrowing capacity of ₹2,500 crore till June-end
In anticipation of ₹3,000 to ₹4,000 crore dip in revenue due to lockdown in May, the State government was contemplating to borrow money from ways and means advances and overdraft facility of the Reserve Bank of India (RBI) to shore up its resources in June.
The government has already raised ₹5,500 crore through securities and bonds till now in this quarter and was left with a borrowing capacity of ₹2,500 crore till June-end.
Drop in earnings
With the drop in earnings and a commitment to disburse ₹7,000 crore towards Rythu Bandhu in June, officials said there was no other option but to resort to ways and means and OD.
It was precisely the tight financial position of the Telangana government which motivated Finance Minister T. Harish Rao to seek a hike in FRBM limit up to 5% of GSDP at the GST Council meeting on Friday.
The Centre had eased FRBM norms last year due to first wave of COVID and given them permission to raise borrowings up to four per cent which was an increase of one per cent over normal rate.
At four per cent, the exposure of government to credit for 2021-22 was ₹ 41,000 crore.
Of this, ₹ 8,000 crore would be exhausted by June-end. But, officials said a recurring loss in revenue of ₹3,000 to ₹4,000 crore a month in the present circumstances would far overshoot ₹41,000 crore.
As one more per cent of hike in FRBM limit would have given the government some more leeway since it would fetch an additional ₹10,000 crore, the Centre was asked to concede the same at the GST Council meeting on Friday, sources said.
Source: Read Full Article