Telangana's mounting debt crisis could reach alarming levels now that Chief Minister K Chandrasekhar Rao government is on the hunt for banks to borrow more money. According to The Times Of India, a major portion of the loan will not be set aside for any welfare and development scheme, but for the 400 percent proposed salary hike for MLAs and MLCs.
Deputy Chief Minister M Mahmood Ali was quoted justifying the raise and saying that it had been a long pending demand and the "government was obliged to hike the salaries."
The report said that if the proposal was approved, the salary of the MLAs and MLCs would increase from Rs 96,000 to a whopping Rs 4 lakh per month. It would create an additional burden of over Rs 100 crore on the exchequer as ex-legislators and widows of former law-makers are included as beneficiaries of the scheme. In fact, the Delhi Assembly recently approved a hefty hike in basic salary and allowances of its members.
The Telangana government is looking at Rabobank, New Development Bank of BRICS, Japan International Cooperation Agency (JICA,) National Bank for Agriculture and Rural Development (Nabard), and Housing and Urban Development Bank (Hudco) to borrow funds.
The Opposition has come down heavily on the TRS government for its borrowing pattern. During the state budget debate, BJP floor leader K Laxman pointed out that the state had Rs 83,000 crore of debts when it was formed in 2014 and another Rs 50,000 crore debt is now added with the government seeking to borrow funds for the implementation of its programmes double-bed room houses for poor and 'Mission Bhagiratha.' As per The Times Of India, the total debt burden was projected to be more than Rs 1.3 lakh crore.
Referring to Chief Minister K Chandrasekhar Rao's recent comments that even developed nations like the United States borrow money, Laxman said that borrowing is not wrong, but it should not exceed limits.
Finance Minister Etala Rajender assured that the public debt in Telangana was under control and the government was expecting growth in the real estate, IT and ITES and commercial taxes sectors.
According to The Hands India report, the Fiscal Responsibility and Budget Management (FRBM) Act limits the state's borrowing to 3 percent of the state domestic product. In order to secure more loans, Telangana has been demanding to raise the FRBM limit to 3.5 percent.
With inputs from PTI
Firstpost is now on WhatsApp. For the latest analysis, commentary and news updates, sign up for our WhatsApp services. Just go to Firstpost.com/Whatsapp and hit the Subscribe button.
Updated Date: Mar 21, 2016 12:49:43 IST