The Reserve Bank of India (RBI)’s recent report on state finances revealed shocking facts about Telangana fiscal condition. The report stated that the debt of Telangana State has increased to 22.2 per cent of its Gross State Domestic Product (GSDP) in the financial year 2017-18 as against 12.7 per cent in previous fiscal 2016-17. It also added that, Andhra Pradesh’s debt has come down from 36.4 per cent of GSDP in 2016-17 to 27.3 per cent in 2017-18.
RBI released the report with title ‘State finances: A study of Budgets’. RBI focused on the states fiscal condition. The report pointed out that TS state is undergoing fiscal stress due to several factors, including loan waivers, and higher borrowings. Even though Telangana state leadership says that it is the richest state in the country, as per report, it’s debt burden is increasing year after year. RBI also reported that even though Andhra Pradesh faced a financial crisis after bifurcation, gradually the state has been able to reduce the debt ratio in GSDP from 36.4% to 27.3%.
RBI report also noted that, in Tamil Nadu, in 2016-17 the ratio was 21.6 per cent and in 2018-19 it was 23.2 per cent. Similarly Kerala had a debt ratio in 2016-17 of 31.1 per cent and in 2018-19 it was 32.4 per cent. As everybody knows, increase of the debt ratio in GSDP shows indicates inefficient fiscal management. So, RBI report definitely indicates that Telangana’s fiscal management is not going in right direction.
