Populism sees TS, AP fiscal deficit soar: RBI

Spending on welfare schemes highest in the country

The Reserve Bank of India has noted in its latest report that the fiscal deficit has soared in both TS and AP, the outcome of its financial indiscipline and higher spending on populist schemes.

A fiscal deficit occurs when a government’s expenditure exceeds its revenue.

After bifurcation, AP’s fiscal deficit has increased from `17,000 crore in 2015-16 to `20,500 crore in 2016-17, while it has gone up from `16,910 crore to `23,470 crore in TS

The debt burden of both the states has also increased, with the governments depending heavily on loans to fund projects. AP’s debt burden has increased from `1.22 lakh crore to `1.60 lakh crore and in TS it has gone up from `72,660 crore to `1.12 lakh crore.

However, TS has been revenue-surplus since its formation three years ago while AP continues to reel under a revenue-deficit.

According to the second edition of RBI’s statistical publication, ‘Handbook of Statistics on States 2016-17’, which was released on June 24, the fiscal deficit of all states is projected to increase to `4,49,520 crore as per their Budget estimates for fiscal 2017.

It says the gross fiscal deficits of all states skyrocketed to `4,93,360 crore in fiscal 2016 from `18,790 crore in FY1991. Uttar Pradesh and Rajasthan witnessed higher fiscal deficits when compared with other states.

The TS government has been implementing more populist and welfare schemes than its AP cunterpart, and has lined up more schemes every month in the runup to the 2019 elections.

New pension schemes, the sheep distribution scheme, increase in salaries for all categories of employees have led to an increase in the government’s expenditure in TS.

The burden of welfare schemes, `25,000 crore a year when the state was formed in 2014, has now shot up to nearly `45,000 crore, the highest in the country.

Social security pensions for widows and aged persons have been increased in both the states from `200 per month `1,000 and for physically challenged from `500 to `1,500. The TS government has recently extended this scheme to single women and beedi workers.

The TS government recently launched distribution of over 84 lakh sheep to members of the Yadava and Kuruma communities by spending over `5,000 crore.

It has announced a scheme to set up modern saloons for Nayi Brahmins and distribute washing machines and provide modernised dhobi ghats to Rajakas by spending `500 crore from July.