Budget data contradicts Congress Government's narrative of economic crisis in Telangana

Hyderabad: The Congress Government seems to be grappling with efforts to establish an economic crisis in Telangana. Since the elections and the formation of the government in December 2023, Congress leaders have been attempting to construct a narrative asserting that the previous BRS Government had severely damaged the state's finances. However, the economic data does not support their claims.

This discrepancy was evident in the interim budget for the financial year 2024-25, presented by Deputy Chief Minister Bhatti Vikramarka Mallu in the Assembly on February 10.

In his budget speech, Bhatti employed strong language to criticise the "financial mismanagement" of the previous government. He stated, "The state is in dire economic condition. A prosperous state like ours has been reduced to a begging bowl due to the misdeeds of the earlier rulers. The state economy has suffered tremendously. Instead of investing in state infrastructure development, the government has squandered funds on non-essential activities. The government's credibility suffered as it defaulted in clearing the bills for the expenditures it incurred," he declared at the beginning of his 40-page speech.

However, he failed to present the numbers proving the "dire economic condition" in Telangana. However, he pointed out the non-utilisation of allocated funds for various purposes, stating, "In the budget for 2021-22, Rs.17,700 Crores were allocated for Dalit Bandhu, but not a single rupee was released. Further, as per CAG accounts for 2021-22, Rs.4,874 Crores allotted to SC Welfare was not spent, Rs.2,918 Crores allocated to ST development was not spent, Rs.1,437 crores allocated for Backward classes development was not spent."

The non-utilisation of the allocated budget for a specific scheme does not necessarily render a state bankrupt. Governments commonly redirect funds for other purposes or withhold releases due to various factors. Moreover, mismanagement or misappropriation of funds in some schemes does not imply the entire state has gone bankrupt.

Nevertheless, Bhatti Vikramarka attempted to depict an economic crisis in Telangana by using comparative figures from the previous years, showing a decline in the economy. However, in doing so, he mixed up several factors and failed to effectively convey his intended message. "In the fiscal year 2023-24, the Gross State Domestic Product (GSDP) of Telangana showed an increase in current prices from Rs. 13,02,371 crores in 2022-23 to Rs. 14,49,708 crores. However, the economic growth rate exhibited a downward trend, declining from 14.7 percent to 11.3 percent during the same period. The growth rate at the national level, however, showed a sharper decline, falling from 16.1 percent to 8.9 percent.

Consequently, Telangana's state growth rate was higher by 2.4 percentage points compared to the India GDP growth rate," he explained in the budget speech.

"The economic growth rate in Telangana, in constant prices, declined by 1.0 percentage points to 6.5 percent in 2023-24 from 7.5 percent in the previous year. Whereas the increase in growth was marginal at 0.1 percent at the country level. This shows that the Telangana economy experienced a sharp decline in growth," Bhatti said in the budget speech.

However, a 1 percent decline in growth rate in one year is not conclusive proof of an economic crisis and is a common phenomenon for all states and countries. The Deputy CM also attempted to portray Telangana as having a high inflation rate compared to the national average, but the numbers he presented did not support his claim. "The higher Consumer Price Index in Telangana stood at 6.65 percent in December 2023, placing the state fifth in the country in terms of inflation rate, compared to India's 5.69 percent," he said. However, the difference of less than one per cent does not convey anything substantial.

To establish the mismanagement of finances by the previous BRS regime, the Congress Government should have provided figures comparing the economy in 2014-15 with the latest figures of 2023-24. Due to obvious reasons, Bhatti Vikramarka cannot go for a comparison of the economy for 10 years.

For instance, the first budget presented on November 5, 2014, by then Finance Minister Eatala Rajender (now in the BJP), was Rs. 1,00,637.96 crore. After 10 years, Bhatti Vikramarka presented an interim budget of Rs 2,75,891 crore for the financial year 2024-25. Therefore, the size of the budget has increased by approximately 173.98% from 2014-15 to 2023-24. If there was an economic slowdown or the use of inflated figures to show higher revenues, then how could the budget size increase by an average of 17.23 percent every year, including the period when the economy shattered due to the COVID-19 pandemic?

The Deputy CM, in his budget speech, stated that "the Per Capita Income based on the present-day prices is expected to be Rs. 3,43,297 in 2023-24. It was Rs.3,09,912 last year, but the growth rate has decreased."

However, he failed to mention that the per capita income of Telangana was Rs 93,151 in 2013-14, which was higher than the national average of Rs 74,920. Therefore, if Telangana was mismanaged financially, then how has the per capita income of Telangana increased by approximately 268.52 percent from 2014-15 to 2023-24?

Similarly, the State's GSDP has increased by approximately 186.50 percent between 2014-15 and 2023-24. The GSDP of Telangana was Rs 5,05,849 crores in 2014-15, and it has increased to Rs 14,49,708 crores in 2023-24.

The Congress Government has been targeting the previous BRS regime for borrowing huge loans and their utilisation for non-productive purposes. While these allegations are likely to be debated during the discussion on the budget in the Telangana Assembly and Council, the Congress Govt has disclosed in the budget documents that it proposes to borrow Rs 59,625.21 crores from the Open Market during the financial year. Therefore, approximately 21.62 percent of the proposed spending of Rs 2,75,891 crores is planned to be mobilized through loans. In this scenario, if the loans borrowed by the previous BRS regime were wrong, then how could the loans being borrowed by the Congress Government be considered right?

In view of the above, it appears that the Congress Government would soon need to look for another narrative as its old narrative of Telangana going bankrupt seems to be unsupported by the economic data.